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32 Cards in this Set
- Front
- Back
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Obligation that will not be satisfied within one year or current oper cycle |
Long-term liability |
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Principal amount of bond as stated on certificate |
Face value |
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Security or financial instrument that allows firms to borrow money and repay loan over long period of time |
Bond |
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Bonds that are not backed by specific collateral |
Debenture bonds |
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Bond where entire principal amt is due on single date |
Term bond |
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Bonds that do not all have the same due date (portion is due each time period) |
Serial bonds |
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Bonds that can be converted to common stock at future date; usually carry lower interest rate |
Convertible bonds |
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Bonds that may be redeemed or retired by issuer before their specified due date; usually stipulates the redemption price |
Callable bonds |
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Bonds that may be redeemed or retired by investor |
Redeemable bonds |
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The two interest rates always involved in bonds payable |
Face rate, market rate |
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The rate of interest on the bond certificate |
Face rate of interest |
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The rate that investors could get by investing in other similar bonds |
Market rate of interest |
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Present value of annuity of interest paymts plus present value of principal |
Bond issue price |
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If market rt is higher than face rt, then bond issued at ________ |
Discount |
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If market rt is lower than face rt, bond issued at __________ |
Premium |
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In calculating issue price of a bond, always use ____________ rate |
Market |
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When calculating interest (annuity) expense, use _________ rate only |
Face (company or “our”) |
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When market rate is higher than face rate, bond issue price is __________ face value of bond |
Below |
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When market rate is lower than face rate, bond issue price is _________ face value of bond |
Above |
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Excess of issue price over Face value of bonds |
Premium |
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Excess of face value of bonds over issue price |
Discount |
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Process of transferring a portion of premium or discount to interest expense |
Effective interest method of amortization |
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Face value of bond plus amt of unamortized premium or minus amt of unamortized discount FcV + premium or FcV - discount |
Carrying value |
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Face value x face rate |
(Cash) Interest |
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Non-operating expense representing interest payable on anything borrowed |
Interest expense |
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A) Interest exp - cash (interest) = B) Cash (int) - interest exp = |
a) Discount on Bonds payable b) Premium on Bonds payable |
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Retirement of bonds by repayment of principal |
Redemption |
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Difference between carrying value and redemption price at time bonds are redeemed; income stmt accounts |
Gain or loss on redemption |
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Contractual arrangement between 2 parties, allowing the lessee the right to use an asset in exchange for payments to lessor |
Lease |
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Lease that doesn’t meet any of four criteria and isn’t recorded as asset by the lessee |
Operating lease |
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Lease that is recorded as asset by the lessee; sufficient rights of ownership and control |
Capital lease |
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Account used to reconcile difference b/t amt recorded as income tax expense and amt payable as income tax |
Deferred tax |
