Intermediate Accounting 13 Accounting and Reporting of Long-Term Liabilities.doc
Intermediate Accounting 13 Accounting and Reporting of Long-Term Liabilities Accounting and Reporting of Long-Term Liabilities Chapter 13 Current Liabilities and Contingencies Bonds Payable Long-Term Notes Payable Reporting and Analysis of Long-Term Debt Issuing bonds Types and ratings Valuation Effective-interest method Costs of issuing Treasury bonds Extinguishment Notes issued at face value Notes not issued at face value Special situations Mortgage notes payable Off-balance-sheet financing Presentation and analysis Bonds Payable Long-term debt consists of probable future sacrifices of economic benefits arising from present obligations that are not payable within a year or the operating cycle of pany, whichever is longer3>. LO 1 Describe the formal procedures associated with issuing long-term debt. Examples: Bonds payable Notes payable Mortgages payable Pension liabilities Lease liabilities Long-term debt has various covenants or restrictions. Issuing Bonds LO 1 Describe the formal procedures associated with issuing long-term debt. Bond contract known as a bond indenture. Represents a promise to pay: sum of money at designated maturity date, plus periodic interest at a specified rate on the maturity amount (face value). Paper certificate, typically a $1,000 face value. Interest payments usually made semiannually. Purpose is to borrow when the amount of capital needed is too large for one lender to supply. Types of Bonds LO 2 Identify various types of bond issues. Common types found in practice: Secured and Unsecured (debenture) bonds, Term, Serial, and Callable bonds, Convertible bonds, Commodity-backed bonds, Deep-discount bonds (Zero-interest debenture bonds), Registered bonds and bearer or coupon bonds, e and Revenue bonds. Valuation of Bonds – Discount and Premium LO 3 Describe the accounting valuation for bonds at date of issuance. Between the time pany sets the terms and the time it issues the bonds,
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