chp 14 part 1 - chapter 14 part 1 homework questions

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1) a) Companies can obtain funds for long term debts through lenders. b) A bond indenture is a contract about a promise to pay the money at the designated maturity c) A mortage is a lien on real estate to protect a lender. 2) Term bonds are bonds with one maturity date Mortage bonds are those that are secured by a lien on real estate A debenture bond is an unsecured bond, is usually risky and therefore pays a high interest rate Income bonds are those that don’t pay no interest unless the issuing company is profitable Callable bonds are those that give the issuer the right to call and retire bonds prior to maturity Registered bonds are those issued in the name of the owner of a company Bearer or coupon bonds are those that can be transferred from one owner to another by mere d Convertible bonds are those that are convertible into other securities of the corporation for a sp Commodity backed bonds and deep discount bonds have been developed in an attempt to attr 3) The effective yield or market rate is the rate of interest earned by the bondholders. The interest rate written in the terms of the bond indenture set by the issuer of the bond are the 4) The stated rate is expressed as a percentage of the face value of the bonds also called par va 5) A discount on bond payable arise if the bonds sells for less than face value A premium on bond payable arise if the bonds sells for more than face value. 6) The bond discount means the company borrowed less than the face or maturity value of the the premium on bond payable is also a liability and more precisely should be recorded in the ad 7) The most common used procedure for amortization of a discount or premium is the effective Under the effective interest method bond interest expense is computed by multiplying the carry 10) it will increase the bond interest expense 11) The call feature is when the issuer retires the bonds prior to maturity. 13) Any excess of the reacquisition prise is a gain from extinguishment and any excess of the reac 20) Off balance sheet financing is an attempt to borrow monies in such a way to prevent recording 30) When a loan is restructured the creditor should calculate the loss due to restructuring by substr BE14-1
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This note was uploaded on 04/14/2011 for the course ACCT 3202 taught by Professor Kenmichael during the Spring '11 term at University of Minnesota Duluth.

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chp 14 part 1 - chapter 14 part 1 homework questions

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