中南财经政法大学：《中级会计学 Intermediate Accounting》课程电子教案（PPT课件讲稿，英文版）Chapter 11 Long-term Liabilities And Receivables

11 Long-term Liabilities And Receivables ntermediate Accounting Accounting School. Zhongnan

11 Long-term Liabilities And Receivables Accounting School ·Zhongnan University of Economics & Law ntermediate Accounting I 中级会计学

Long-term Liabilities And Receiva 1. Reasons for Issuance of Long Term Liabilities v Debt financing may be the only available source of funds v Debt financing may have a lower cost v Debt financing offers an income tax advantage v The voting privilege is not shared Y Debt financing offers the opportunity for leverage

1. Reasons for Issuance of Long￾Term Liabilities ✓ Debt financing may be the only available source of funds. ✓ Debt financing may have a lower cost. ✓ Debt financing offers an income tax advantage. ✓ The voting privilege is not shared. ✓ Debt financing offers the opportunity for leverage. Intermediate Accounting 11 Long-term Liabilities And Receivables

2. Bonds Payable Characteristics of Bonds. Debenture bonds Mortgage bonds c Registered bonds Coupon bonds Zero-coupon bonds Callable bonds Convertible bonds Serial bonds

Characteristics of Bonds • Debenture bonds • Mortgage bonds • Registered bonds • Coupon bonds • Zero-coupon bonds • Callable bonds • Convertible bonds • Serial bonds Intermediate Accounting 11 Long-term Liabilities And Receivables 2. Bonds Payable

Long-term Liabilities And Receiva Steps a Company Must Follow When It Issues bonds It must receive approval from regulatory authorities, such as the securities and Exchange commission The company must set the terms of the bond issue, such as the contract rate and the maturity date It must make a public announcement of its intent to sell the bonds on a particular date and print the bond certificates

Steps a Company Must Follow When It Issues Bonds ▪ It must receive approval from regulatory authorities, such as the Securities and Exchange Commission. ▪ The company must set the terms of the bond issue, such as the contract rate and the maturity date. ▪ It must make a public announcement of its intent to sell the bonds on a particular date and print the bond certificates. Intermediate Accounting 11 Long-term Liabilities And Receivables

Long-term Liabilities And Receiva Recording the Issuance of bonds Company j sells bonds with a face value of $400,000 on the authorization date at 102 Cash($400,000x1.02) 408.000 Bonds payable 400.000 A contra account- yable 8.000 subtracted from nds with a face value of Bonds payable lthorization date at 97 Cash($40 388.000 Discount on bonds payable 12.000 Bonds payable 400.000

Recording the Issuance of Bonds Company J sells bonds with a face value of $400,000 on the authorization date at 102. Cash ($400,000 x 1.02) 408,000 Bonds Payable 400,000 Premium on Bonds Payable 8,000 Company M sells bonds with a face value of $400,000 on the authorization date at 97. Cash ($400,000 x .97) 388,000 Discount on Bonds Payable 12,000 Bonds Payable 400,000 A contra account— subtracted from Bonds Payable Intermediate Accounting 11 Long-term Liabilities And Receivables

Long-term Liabilities And Receiva Recording the Issuance of bonds On March 1, 2004, Grimes Corporation issues $800,000 of 10-year bonds dated January 1, 2004 at par. The bonds have a contract(stated)interest rate of 12% and pay interest semiannual Cash 816.000 Interest expense 16.000 Bonds payable $800.000X0.12x2/12 Continued

Recording the Issuance of Bonds On March 1, 2004, Grimes Corporation issues $800,000 of 10-year bonds dated January 1, 2004 at par. The bonds have a contract (stated) interest rate of 12% and pay interest semiannually. Cash 816,000 Interest Expense 16,000 Bonds Payable 800,000 $800,000 x 0.12 x 2/12 Continued Intermediate Accounting 11 Long-term Liabilities And Receivables

Long-term Liabilities And Receiva Recording the Issuance of bonds On July 1, 2004, Grimes Corporation records the semiannual interest payment Interest Expense 48.000 Cash 48.000 Interest Expense 48000 16.000 $800.000X0.12x6/12 32.000 The balance of $32,000 represents the interest cost since the bonds were issued

Recording the Issuance of Bonds On July 1, 2004, Grimes Corporation records the semiannual interest payment. Interest Expense 48,000 Cash 48,000 $800,000 x 0.12 x 6/12 Interest Expense 48,000 16,000 The balance of $32,000 represents the interest cost since the bonds were issued. 32,000 Intermediate Accounting 11 Long-term Liabilities And Receivables

amortizing Discounts and Premiums

Amortizing Discounts and Premiums Intermediate Accounting 11 Long-term Liabilities And Receivables

Long-term Liabilities And Receiva Issuing bonds at a Discount Straight-Line method Jet company sells bonds for $92,. 39 on January 1, 2004. The bonds have a face value of S100,000 and a 12% stated annual interest rate. Interest is paid semiannually and the bonds mature on december 31. 2008 Cash 92976.39 Discount on bonds payable 7023.61 Bonds payable 100.000.00 Continued

Issuing Bonds at a Discount Jet Company sells bonds for $92,976.39 on January 1, 2004. The bonds have a face value of $100,000 and a 12% stated annual interest rate. Interest is paid semiannually and the bonds mature on December 31, 2008. Cash 92,976.39 Discount on Bonds Payable 7,023.61 Bonds Payable 100,000.00 Continued Straight-Line Method Intermediate Accounting 11 Long-term Liabilities And Receivables

Long-term Liabilities And Receiva Issuing Bonds at a Discount Straight-Line method Jet company records the first interest payment on June 30. 2004 Interest Expense 6.702.36 Discount on bonds payable 702.36 Cash $6.000+$702.36 1000036110

Jet Company records the first interest payment on June 30, 2004. Interest Expense 6,702.36 Discount on Bonds Payable 702.36 Cash 6,000.00 $6,000 + $702.36 Issuing Bonds at a Discount $100,000 x 0.12 x 1/2 $7,023.61 ÷ 10 Straight-Line Method Intermediate Accounting 11 Long-term Liabilities And Receivables