ch14tc - CHAPTER 14 LONG-TERM LIABILITIES Intermediate...

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Chapter 14-1 C H A P T E R C H A P T E R 14 14 LONG-TERM LIABILITIES LONG-TERM LIABILITIES Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield
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Chapter 14-2 1. Describe the formal procedures associated with issuing long-term debt. 2. Identify various types of bond issues. 3. Describe the accounting valuation for bonds at date of issuance. 4. Apply the methods of bond discount and premium amortization. 5. Describe the accounting for the extinguishment of debt. 6. Explain the accounting for long-term notes payable. 7. Explain the reporting of off-balance-sheet financing arrangements. 8. Indicate how to present and analyze long-term debt. Learning Objectives Learning Objectives
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Chapter 14-3 Bonds Payable 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 the company, whichever is longer. 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 .
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Chapter 14-4 Issuing Bonds 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: (1) sum of money at designated maturity date, plus (2) 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.
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Chapter 14-5 Types and Ratings of Bonds Types and Ratings 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, Income and Revenue bonds.
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Chapter 14-6 Types and Ratings of Bonds Types and Ratings of Bonds LO 2 Identify various types of bond issues. Corporate bond listings would look like those below.
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Chapter 14-7 Valuation of Bonds – Discount and Premium Valuation of Bonds – Discount and Premium LO 3 Describe the accounting valuation for bonds at date of issuance. Between the time the company sets the terms and the time it issues the bonds, the market conditions and the financial position of the issuing corporation may change significantly. Such changes affect the marketability of the bonds and thus their selling price. The investment community values a bond at the present value of its expected future cash flows, which consist of (1) interest and (2) principal .
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Chapter 14-8 Interest Rates Stated , coupon , or nominal rate = The interest rate written in the terms of the bond indenture. Market rate
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This note was uploaded on 04/14/2010 for the course TOBIN 630 taught by Professor Alan during the Fall '10 term at Adams State University.

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ch14tc - CHAPTER 14 LONG-TERM LIABILITIES Intermediate...

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