The effect of a premium on bonds issued to finance a capital project is that more resources are received on the issuance of the bonds than originally planned. The use of these resources will depend on the terms of the bond issue. This extra cash may be used in the construction activities, or, in some instances, it must be transferred to a Debt Service Fund. The key is the terms of the bond indenture. Bond premiums should be accounted for separately from the face amount of the bond. what will be the accounting for a bond premium, will it include a credit to the account Other financing source bond issue premium?