Bond issue costs
Q: Issuing Bonds at a Premium
A: Bonds issued at premium means bonds issued at a price higher than par value.
Q: What is Bond's interest income?
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: Define revenue bonds
A: Answer: A revenue bond is also regarded as a municipal bond that is sponsored by specific individual…
Q: Explain Classifications of Debt Investments.
A: Debt securities: Debt security is money borrowed at a specific rate of interest which must be repaid…
Q: . How is the value of a bond determined?
A: Bond valuation: It may be a method utilized to decide a given bond's hypothetical reasonable value.…
Q: The amortization on a bond premium:
A: The amortization on a bond premium: (d) Is calculated by multiplying the bond’s carrying value by…
Q: When a bond is issued, what is its present value?
A: The present value of the bond is the total of the present value of the bond's interest payments that…
Q: Define corporate bond
A: The corporate bonds are those types of bond issued by companies and generally mature with a time…
Q: how to interpret the process of bond issuance?
A: Corporate Bond Issue: Corporate bond issuance is one method of raising capital for a company. A bond…
Q: What is original issue discount (OID) bond?
A: It is the amount of difference between the amount due at maturity and purchase value. These bonds…
Q: Define Indexed bond.
A: Indexed bond can be defined as a bond in which interest payment are based on some defined price…
Q: How is the present value of a bond calculated?
A:
Q: Define debt investment.
A: Debt Investment: Debt Investment considered as Lending money on loan to the issuing entity. The main…
Q: Define CDO, collateralized debt obligation
A: The question is based on the structure and definition of Collateralized debt obligation (CDO), the…
Q: Define capital gains yield (on a bond)
A: The formula to compute capital gain yield as follows:
Q: Define Convertible Bonds.
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: When does a discount on bonds payable occur?
A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…
Q: Explain purchasing power bond
A: Bonds: A bond, also recognized as a fixed-income security, is a debt instrument shaped for the…
Q: Define the terms "debt security" and "equity security." Include comparisons and contrasts in your…
A: Introduction: Securities: To raise money from the public or private markets, securities are the…
Q: Define bond amortization.
A: Bonds: Bonds are a kind of interest-bearing notes payable, usually issued by companies,…
Q: How is the price determined for a bond (or bond issue)?
A:
Q: What are bonds classified as?
A: Issue of bonds is a source of funds of a company. They are an acknowledgement of debt taken by the…
Q: Define discount bond
A: Bonds: A bond, also recognized as a fixed-income security, is a debt instrument shaped for the…
Q: Why discount and premium on issue of bonds is amortized?
A: Bonds are intangible assets, the amortization is similar to depreciation, it means systematically…
Q: Define Debt Issue Costs.
A: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies, universities…
Q: credit to Premium on Bonds Payable?
A: Premium on Bonds Payable is the amount at which it is issued in excess of par value. Premium on…
Q: Define bonds discount and give an example.
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: Clearly explain the difference between debt securities market and equity securities market
A: Equity securities market is the place where equities of corporates are traded, i.e. purchased and…
Q: Corporate bonds
A: Advantages of Corporate Bonds One major draw of corporate bonds is their strong returns, compared to…
Q: When does a premium on bonds payable occur?
A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…
Q: Explain payment-in-kind (PIK) bonds
A: A financial instrument that does not affect the ownership of the common shareholders or management…
Q: Compute bond proceeds, amortizing premium by interest method, and interest expense
A:
Q: Explain rating (bond)
A: Bond: Bond is a kind of debt instrument typically issued by corporations, government organizations…
Q: What is premium on bonds payable?
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…
Q: Explain required rate of return on debt
A: Debt is some amount of money owed by a borrower to the creditor. Debt can be two types. One is…
Q: Define embedded rate (for debt)
A: An embedded option is the component of financial security the gives the issuer of the debt option or…
Q: Compare bond financing with stock financing
A: Bond financing It is a type of long-term borrowing that state and local governments frequently…
Q: Prepare a bond amortization schedule.
A: A bond refers to the instrument which is issued by the government to borrow money when needed. It is…
Q: Describe Debt Investments to Be Held to Maturity.
A:
Q: Define Treasury bond (T-bond)
A: The treasury bonds along with the treasury notes & treasury bills are considered to be risk free…
Q: What is Debt Securities Market?
A: The debt market is the place where the investments in debts or loans are traded. The participants in…
Q: Define secured debt
A: The term debt refers to the money taken out a loan from individuals, financial institutions, or…
Q: Distinguish between equity and debt securities.
A: Equity and debts are the most important forms for fund raising. Equity refers to the investment…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- The printing costs and legal fees associated with the issuance of bonds should Select one: a. be expensed when incurred. O b. be reported as a deduction from the face amount of bonds payable. c. not be reported as an expense until the period the bonds mature or are retired. d. be recorded as a reduction of the bond issue amount and then amortized over the life of the bonds.Part I:. The appropriate method of amortizing a premium or discount on issuance of bonds is the effective‐interest method. Instructions a. What is the effective-interest method of amortization and how is it different from and similar to the straight‐line method of amortization? b. How is amortization computed using the effective‐interest method, and why and how do amounts obtained using the effective‐interest method differ from amounts computed under the straight-line method? Part II: Gains or losses from the early extinguishment of debt that is refunded can theoretically be accounted for in three ways: 1. Amortized over remaining life of old debt. 2. Amortized over the life of the new debt issue. 3. Recognized in the period of extinguishment. Instructions a. Develop supporting arguments for each of the three theoretical methods of accounting for gains and losses from the early extinguishment of debt. b. Which of the methods above is generally accepted and how should…2. The printing costs and accounting/legal fees associated with the issuance of bonds should: (A) Be expensed when incurred. (B) Be reported as a deduction from the face amount of the bonds payable on the balance sheet. (C) Be accumulated in a deferred charge account (unamortized asset) and amortized to expense over the life of the bonds. (D) Be recorded as an expense all in the year the bonds mature or are retired. (E) None of the above.
- ll of the following are differences between IFRS and GAAP in accounting for liabilities except: a. When a bond is issued at a discount, GAAP records the discount in a separate contra liability account. IFRS records the bond net of the discount. b. Under IFRS, bond issuance costs reduce the carrying value of the debt. Under GAAP, these costs are recorded as an asset and amortized to expense over the terms of the bond. c. GAAP, but not IFRS, uses the term “troubled-debt restructurings.” d. GAAP, but not IFRS, uses the term “provisions” for contingent liabilities which are accruedHow is the premium or discount on debt investments at fair value through profit or loss accounted for? As part of amortized cost and amortized over the life of the bonds. As part of the cost until the disposal of the asset. As expense or revenue in the period the bonds are purchased. All of the above.The balance in Unamortized Premium on Bonds Payable should be O a. reported separately in the Current Liabilities section of the talance sheet. O b. added to the face amount of the related bonds payable on the balance sheet, O C. reported in the Paid-In Capital section of the balance sheet. Od. reported on the balance sheet as a deduction from the face amount of the related bonds payable.
- 5. The premium on bonds payable account is shown on the statement of financial position as a.a contra asset. b.a subtraction from a long-term liability. c.an addition to a long-term liability. d.a reduction of an expense.What is the treatment of transaction costs from issuance to a bond payable measured using the effective interest method? Ignored Added to the initial cost Same as discount Same as premiumWhich of the following is not a valid statement regarding bonds payable? a. Bonds issued by an entity represent a financial liability and shall be measured at amortized cost using the effective interest method. b. The market price of a bond issue is the present value of its principal amount plus the present value of all future interest payments, both discounted at the market rate of interest when the bonds were issued. c. Bonds that mature at a single date are called term bonds. d. The amortization of a bond premium increases both the recorded interest expense and amortized cost.
- According to the PFRS, discount or premium on bonds payable may be amortized using the straight-line method.Which of the following is stated correctly? a. Current liabilities follow non-current liabilities on the statement of financial position under GAAP but non-current liabilities follow current liabilities under IFRS. b. IFRS does not treat debt modifications as extinguishments of debt. c. Bond issuance costs are recorded as a reduction of the carrying value of the debt under GAAP but are recorded as an asset and amortized to expense over the term of the debt under IFRS. d. Under GAAP, bonds payable is recorded at the face amount and any premium or discount is recorded in a separate account. Under IFRS, bonds payable is recorded at the carrying value so no separate premium or discount accounts are used.The interest expense recorded on an interest payment date is increased a.by the amortization of premium on bonds payable b.only if the market rate of interest is less than the stated rate of interest on that date c.only if the bonds were sold at face value d.by the amortization of discount on bonds payable