Ratability

Ratability means the ability to be assessed, specifically, for taxation.

There are two methods used for calculating accrued market discount where the basic method Ratable accrual is derived by dividing market discount by the number of days in the period from the date when the bond is bought to the date of maturity.

The amount is then multiplied by the number of days the bond is held.  Another method is the constant yield technique used to calculate smaller accrual of market discount. 

Ratable accrual helps to determine how much income is earned during the given phase, in conditions, where the market discount rules apply and the gains are taxed.  

The method can be used in different asset classes investments - to find the market discount for buying bonds e.g. discount bonds traded in the secondary markets or to determine property tax like the buy to let capital gains tax etc.