CH14_S00 - Chapter 14 - Long-Term Liabilities I. A...

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ACCY 304 - Ch 14 1 Chapter 14 - Long-Term Liabilities I. A definition of long-term liabilities [from the conceptual framework] - Probable future sacrifices of economic benefits arising from present obligations that are not payable within one year or one operating cycle, whichever is longer. Long-term liabilities usually take the form of Bonds Payable, Notes Payable, Mortgage Notes Payable, Lease Obligations, or Pension Obligations. Chapter 14 focuses on Bonds and Notes. II. Bonds - a formal obligation of the issuing corporation to pay a designated sum of money at a designated maturity date , plus periodic interest at a designated interest rate . The interest payments are based on the face value of the bond. The characteristics associated with a particular bond may vary. Your text [pages 713- 714] describes several of these characteristics. You should be familiar with these terms . A. When Bonds are: 1) issued at their Par or stated value, and 2) are issued on the interest payment date, the entry to record the issuance of bonds is relatively uncomplicated. Cash XXX Bonds Payable XXX B. There are several situations which make the accounting for bonds more difficult. For example, 1. When bonds are issued on some date other than the interest date. When bonds are issued between interest dates, the purchase price is increased
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CH14_S00 - Chapter 14 - Long-Term Liabilities I. A...

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