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Non-current liabilities (Bonds Payable :star: (Type and ratings of Bonds …
Non-current liabilities
Bonds Payable
:star:
Type and ratings of Bonds :check:
Income and Revenue bonds
Registered and Bearer (Coupon) bonds.
Convertible, Commodity-Backed, Deep-Discount bonds.
Term, Serial, and Callable bonds.
Secured and Unsecured (debenture) bonds.
Valuation :check:
Factor of selling price of a bond issue
relative risk
market conditions
supply and demand of buyers and sellers
state of the economy
Interest rate
Coupon or Nominal rate
Market rate
How to calculate
Amount intererst that is actually paid
(stated rate x face value of bond)
interest expense
(market rate x carrying value bond)
Issuing Bonds
:check:
Bond contract known as a bond indenture.
Represents a promise to pay
sum of money at designated maturity date, plus
periodic interest at a specified rate on the maturity amount (face value).
Interest payments usually made semiannually
Paper sertificate
4.Effective interest method
:check:
Bond issued at?
Par (market rate = coupon rate), paid equal to face value
Premium (market rate < coupon rate), paid more than face value
Discount (market rate > coupon rate), paid less than face value
Amortization (when issued at disscound or premium)
Bonds Issued between Interest Dates
(Investor pay interest accrued from last interest payment date to date issued)
Special Issues :star:
Fair value option :!?:
more relevant and understanable
Recognized Unrealized Holding Gain or Loss—Income
Off balance-sheet financing :!?:
Special Purpose Entity (SPE)
Operating Leases
Non-Consolidated Subsidiary
Extinguisment : :!?:
Extinguishment by transferring assets or securities
non cash asset/equity received at fair value
recognize gain (carrying amount payable > fair value asset/equity
Extinguishment with modification of terms
Reduction of the stated interest rate
Extension of the maturity date
Reduction of the face amount
Reduction or deferral of any accrued interest
Extinguishment with cash before maturity
Reacquisition price > Net carrying amount = Loss
Net carrying amount > Reacquisition price = Gain
unamortized premium or discount must be amortized up
Presentation and analysis :!?:
Fair value of the debt should be disclosed
Analysis of Non-Current Liabilities
Debt to Assets
Times Interest Earned
Long-Term Notes Payable :star:
Mortages notes payable
:explode:
Common form of long-term notes payable
Payable in full at maturity or in installments.
Fixed-rate mortgage
Variable-rate mortgage
Notes : issues at face value :explode:
Special stituations
:explode:
Notes Issued for Property, Goods, or Services
Choice of Interest Rates
the stated interest rate is presumed to be fair
if fair value propery cannot determine or the note has no ready market, PV determined by company
Notes not issues at face value
:explode:
Zero-Interest-Bearing Notes
issued at discount
amortizes that amount to interest expense
Interest-Bearing Notes
Issued at premium
Issued at discount
Created by Muchammad Cholid Muttaqin
(8-1 DIV Akuntansi Alih Program)