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8.1. LONG-TERM LIABILITIES AND EQUITY - Coggle Diagram

- - - - Issuance at Face value:
        
        Dr Cash
        
        Cr Bond payables
        CFF increase
        CFO decrease
      - Issuance at Premium
        
        Dr Cash
        
        Cr Unamortized bond premium
        
        Cr Bond payable Difference between issued value and par value must be amortized
      - Issuance at Discount
        
        Dr Cash
        
        Cr Unamortized bond discount
        
        Cr Bond payable Difference between issued value and par value must be amortized
  - - - On BS:
        
        Par bond: not change
        
        Pre bond: the book value of bond liabilities decrease until reach Par
        
        Dis bond: the book value of bond liabilities increase until reach Par
      - On IS:
        
        Interest expense = Market rate at issuance x the book value of bond liability at beginning of each period
        
        Par bond: Interest expense = coupon payment & constant
        
        Pre bond: IE < coupon payment & decrease over time
        
        Dis bond: IE > coupon payment & increase over time
      - On CF:
        
        Coupon payments are reported as CFO under GAAP
        
        Coupon payment are reported as CFO or CFF under IFRS
    - - On BS:
        
        Remove the bond issued
      - On IS: N/A
      - On CF:
        
        Principle repayment (face value) of the bond is reported as a cash outflow from financing (CFF)
  - - - Legal & accounting fees
      - Printing costs
      - sales commissions
      - other fee
    - - GAAP & IFRS: are expensed in the measurement of the liability and decrease the initial bond liability on the BS and increase the bond's effective interest rate
      - reported as an outflow of CFF
      - Special case: GAAP only
        
        Permit to capitalize these costs (deferred charge)
        
        Allocated to the IS on a straight-line basis