Accounting Chapter 14 LearnSmart

yield

supply and demand will cause bonds issued with similar risk and maturity to have the same:

equal

the interest rate stated in a note is typically __ to the market rate

materiality

use of the straight line method for amortizing bond discounts and premiums is justified with reference to the __ concept

debit

when a promissory note matures and is paid, the borrower should __ notes payable

deep discounts

zero coupon bonds issue at:

GAAP

Under this, recognize a separate asset for issue costs

IFRS

Under this, reduce the amount of debt recognized for issue costs

premium

a bond that sells for more than its face amount is sold at a:

market interest rates decreased

a common reason for redeeming a bond prior to its maturity is that:

promissory

a company that recognizes a long-term notes payable has signed the legal document referred to as a __ note

debenture

bonds that are well received by investors solely based on the excellent reputation and past performance of the company, its products, and its executives are this kind

serial

bonds that systematically mature over a series of years are called __ bonds

liabilities

characteristics of __; interest accrues as time passes, the requirement of future cash payments, and future cash payments are certain or estimable

purchasing bonds, call features

common strategies for debtors to retire bonds prior to the maturity date

fair value

report bonds payable (publicly traded bonds) at this

present value

generally, liabilities are valued at their:

premium

if a bond issued for 102, this means that the company issued the bond at a:

single

in a private offering the bonds are sold to a(n) __ invesor

amortized

over time the carrying value of bonds issued at a premium decreases because the premium is:

interest, principal

periodic payments on installment notes include:

early extinguishment

retiring any type of debt prior to its scheduled maturity date is referred to __ __ of debt

present value of principal and interest payments

report notes not traded on market exchanges at this

effective, outstanding

as a general rule, periodic interest is calculated by multiplying the __ interest rate by the amount of debt __

installment

because periodic payments on capital leases include both interest and loan reduction portion, notes associated with capital leases are in essence __ notes

face amount

bonds may sell below, above, or at their __ __.

assets

on the date bonds are issued, bond issue costs should be recognized as:

price

the __ of a bond is always equal to the present value of the future cash flows

installment loan

the loan balance of this is reduced over time and reaches zero at the end of the loan term

loan with lump sum principal payment at maturity

the loan balance of this reflects the face amount at the date of maturity

bonds payable

the mirror image of investment in bonds is:

declining

the primary purpose of the call feature associated with bonds is to protect the issuer against __ interest rates

indenture

the specific promises made to bondholders are described in a document called a bond:

not recognized separately

the value of a conversion feature is:

financial

these assets and liabilities can be valued at fair market value (825)

nonfinancial

these assets and liabilities cannot be valued at fair market value (825)

registered bonds

these bonds are commonly issued in the present day. pg. 799

bearer bonds

these bonds were commonly issued years ago

underwriting, SEC filing

these fees are required only for publicly placed bonds

legal, accounting

these fees would be associated with both publicly and privately placed bonds

interest recorded

this is equal to the effective interest rate multiplied by the outstanding balance of the debt

return on assets

this ratio is calculated by dividing net income by total assets

return on shareholders equity

this ratio is calculated by dividing net income by total shareholder's equity

times interest earned

this ratio is calculated by dividing net income plus interest plus taxes by interest

debt to equity

this ratio is calculated by dividing total liabilities by shareholder's equity

credit

when a promissory note matures and is paid, the lender should __ notes receivable

same

when the straight-line method of amortizing bond premiums and discounts is utilized, an amortization schedule is unnecessary because the amount of interest expense and revenue and the amount of amortization are the __ each year