Acct 4120 Chapter 14 Spiceland 5th edition

# Acct 4120 Chapter 14 Spiceland 5th edition - Acct 4120...

This preview shows pages 1–7. Sign up to view the full content.

Acct 4120 Chapter 14 Bonds and Long- Term Notes

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Accounting Equation Assets Liabilities + Stockholders’ Equity Company’s economic resources (or benefits) Non-owner claims against resources Owners claims against resources Focus of Acct 3110 Chapter 13 Current Liabilities Chapter 14 Long-term Liabilities Chapter 14 page 2
Long-term (or Non-Current) Liabilities: Includes liabilities that cannot be classified as current. Thus, not expected to be due within one year of the balance sheet date or not expected to use current assets when liquidated. Primary focus of Chapter 14. At issuance, shown on the balance sheet at the present value of future cash flows. Chapter 14 page 3

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Long-term Liabilities continued: Two cash flows that are present valued by the market: Principle repayment Periodic interest payments = Principle amount x Stated interest rate x Time period Chapter 14 page 4
Long-term Liabilities continued: Example: Face value or principle = \$100,000 Stated interest rate = 8% Interest payments = \$100,000 x 8% x 6/12 = \$4,000 every six months Number of payments = 5 years until maturity x 2 = 10 payments Chapter 14 page 5

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
PV of bonds = PV of interest payments + PV of maturity amount = (\$4,000 x 8.11090) + (\$100,000 x .67556) Factor from Table 4 Factor from Table 2 Based on 4% and 10 payments = \$32,444 + \$67,556 = \$100,000 Where: i = 4% n = 10 payments Chapter 14 page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 20

Acct 4120 Chapter 14 Spiceland 5th edition - Acct 4120...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online