ch07 Long-Term Liabilities(评估用).ppt
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1、Long-Term LiabilitiesChapter 72023/2/141Bonds:An IntroductionObjective 12023/2/1421.BondsnBonds are groups of notes payable issued to multiple lenders called bondholders.Bond fundamentalsPrincipal amountMaturity valuePar valueMaturity dateStated interest rate2023/2/1432.Types of BondsTerm bondsSeria
2、l bondsSecured or mortgage bondsDebenture bondsMature at a specified dateMature in installments2023/2/1443.Bond PricesnIssuing at a premiumIssuing price above maturity valuenIssuing at a discountIssuing price below maturity value2023/2/1454.Bond Interest Rates nTwo interest rates work together to se
3、t the price of bond:Stated interest ratePrinted on bond and doesnt changeMarket interest rate The rate investors demand for loaning money2023/2/1464.Bond Interest Rates Stated interest rateMarket interest rateIssue price of bonds payable8%10%8%6%8%8%2023/2/147Account for bonds payableTransactions.Ob
4、jective 22023/2/148nIssuing at a premiumIssuing price above par valuenIssuing at a discountIssuing price below par valueReviewStated interest rateMarket interest rateStated interest rate(2)Issuing at a discount2023/2/14121.Issuing Bonds Payable example(3)Issuing at a premiumCorp.sold a 10%,10-year(2
5、0 periods),$1,000,000 bond issue at a price of$101 on Jan.1,20012023/2/14132.Straight-Line Amortization This method amortizes the bond discount and premium by dividing it into equal amounts for each interest period.2023/2/14143.Straight-Line Amortizationof Bond Discount July 12023/2/14153.Straight-L
6、ine Amortizationof Bond Discount2023/2/1416 4.Straight-Line Amortizationof Bond Premium2023/2/1417Jan.1,20114.Straight-Line Amortizationof Bond Premium2023/2/1418NoticeIssuing at a discount:Interest Expense=Stated interest+Amortization of discountIssuing at a premium:Interest Expense=Stated interest
7、-Amortization of premium2023/2/1419Measure interest expense bythe effective-interest method.Objective 32023/2/14201.Effective-Interest Methodof AmortizationnThe effective-interest method keeps interest expense at the same percentage over any bonds life.2023/2/14212.Effective-Interest Method:Bond Dis
8、countnAssume that Corp.issues$400,000 of its 10%bonds at a price of$371,163,at a time when the market rate of interest is 12%.nThese bonds mature in five years and pay interest annually.2023/2/14222.Effective-Interest Method:Bond Discount2023/2/14232.Effective-Interest Method:Bond DiscountnInterest
9、expense at the end of period one?Interest payment at the end of period one?2023/2/1424End of PeriodCarrying ValueInterest ExpenseCash PaidAmortizationIssue371,1632023/2/14252.Effective-Interest Method:Bond Discount2023/2/14263.Effective-Interest Method:Bond PremiumnAssume the Corp.issues a$400,000,5
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