Chapter 11 Long-Term Liabilities

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Table of Contents

Chapter 11 Long-Term Liabilities

LEARNING OBJECTIVES

LEARNING OBJECTIVES (continued)

Management Issues Related to Issuing Long-Term Debt

Reasons for Long-Term Liabilities

Reasons and Resources for Long-Term Debt

The Decision to Issue Long-Term Debt

Disadvantages of Debt Financing

How Much Debt

How Much Debt

Types of Long-Term Debt

Discussion

The Nature of Bonds

The Nature of Bonds

The Nature of Bonds (continued)

The Nature of Bonds (continued)

Bond Features

Secured or Unsecured Bonds

Term or Serial Bonds

Registered or Coupon Bonds

Discussion

Accounting for Bonds Payable

Accounting for Bonds Payable

Balance Sheet Disclosure of Bonds

Important Provisions of the Bond Indenture

Bonds Issued at Face Value

Bonds Issued at Face Value

Bonds Issued at a Discount

Bonds Issued at a Discount

Bonds Issued at a Premium

Bonds Issued at a Premium

Bond Issue Costs

Discussion

Using Present Value to Value a Bond

Using Present Value to Value a Bond

Using Present Value to Value a Bond

Influence of the Market Interest Rate

Discussion

Amortizing a Bond Discount

Bond Discount Issues

Calculation of Total Interest Cost

Calculation of Total Interest Cost

Accounting for Total Interest Cost

Methods of Amortizing a Bond Discount

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Amortizing a Bond Premium

Total Interest Cost

Calculation of Total Interest Cost

Calculation of Total Interest Cost

Straight-Line Method of Amortizing a Bond Premium

Straight-Line Method of Amortizing a Bond Premium

Effective Interest Method of Amortizing a Bond Premium

Effective Interest Method of Amortizing a Bond Premium

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Discussion

Other Bonds Payable Issues

Sale of Bonds Between Interest Dates

Accounting for Sale of Bonds Between Interest Dates

Accounting for Sale of Bonds Between Interest Dates

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Accounting for Year-End Accrual for Bond Interest Expense

Accounting for Year-End Accrual for Bond Interest Expense

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Discussion

Retirement of Bonds

Retirement of Bonds

Accounting for Retirement of Bonds

Conversion of Bonds into Common Stock

Accounting for Conversion of Bonds into Common Stock

Accounting for Conversion of Bonds into Common Stock

Discussion

Other Long-Term Liabilities

Mortgages Payable

Mortgages Payable

Installment Notes Payable

Installment Notes Payable

Payments of Accrued Interest Plus Equal Amounts of Principal

Payments of Accrued Interest Plus Equal Amounts of Principal

Payments of Accrued Interest Plus Increasing Amounts of Principal

Payments of Accrued Interest Plus Increasing Amounts of Principal

Long-Term Leases

Related Accounting Challenges for Long-Term Leases

Capital Leases

Capital Leases

Classifications with Long-Term Leases

Accounting for Long-Term Leases

Accounting for Long-Term Leases

Pensions

Pensions (continued)

Other Postretirement Benefits

Discussion

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Author: Needles & Powers