Bonds

Front 1

interest expense

Back 1

I/E - I/P = A of DISCOUNT. ; I/E = I/P + A OF DISCOUNT. 2) I/P - I/E = A OF PREMIUM :carrying amount is DECREASING. LESS

Front 2

accrued interest expense

Back 2

needs to be recorded FROM the most recent payment date TO the end of the year

Front 3

accrued interest expense vs interest expense

Back 3

Interest expense ( yearly concept) : FROM. the date the bonds were issued to the end of year ( first year)

Front 4

convertible bonds

Back 4

GAAP : NO Value to convertible feature. IFRS: separable to debt ( liability) and equity like bonds w detachable warrant and other compound instrument

Front 5

bond issue cost vs stock issue cost

Back 5

1 capitalized and amortize ( SL) . : commission paid. underwriter legal fee registration printing engraving. 2 stock issue cost: APIC XXX / CASH XXX ( registration cost. issuing cost ) expensed immediately - legal and consulting fee

Front 6

detachable warrant

Back 6

increase S/H equity. : APIC WARRANT 500 bonds × 20 warrant × $5= $50,000

Front 7

interest expense. vs interest payable

Back 7

interest payable = cash payment. interest expense = non cash payment

Front 8

S/L method. vs effective method for interest expense

Back 8

S/L interest expense is determine last ( a of discount + I/P ) effective interest is determined first ( carrying amount. × market rate )