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Accounting chap 10 vocab - rate or coupon rate Face value...

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Vocab Chapter 10 Bond issue price – the present value of the annuity of interest payments plus the present value of the principal. Callable bonds – bonds that may be redeemed or retired before their specified due date. Capital lease – a lease that is recorded as an asset by the lessee. Carrying value – the face value of a bond plus the amount of unamortized premium or minus the amount of unamortized discount; book value. Debenture bonds – bonds that are not backed by specific collateral. Discount – the excess of the face value of bonds over the issue price. Effective interest method of amortization – the process of transferring a portion of the premium or discount to interest expense; this method results in a constant effective interest rate. Face rate of interest – the rate of interest on the bond certificate; stated rate, normal
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Unformatted text preview: rate, or coupon rate. Face value – the principal amount of the bond as stated on the bond certificate; par value. Gain or loss on redemption – the difference between the carrying value and the redemption price at the time bonds are redeemed. Long-term liability – an obligation that will be settled within one year or the current operating cycle. Market rate of interest – the rate that investors could obtain by investing in other bonds that are similar to the issuing firm’s bonds; yields, effective rate. Operating lease – a lease that does not meet any of the four criteria and is not recorded as an asset by the lessee. Premium – the excess of the issue price over the face value of the bonds. Serial bonds – bonds that do not all have the same due date; a portion of the bonds comes due each time period....
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