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Question
The rate of interest investors demand for loaning funds to a
corporation is the:
a. contractual interest rate.
b. face value rate.
c. market interest rate.
d. stated interest rate.
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10-1
SO 4 Explain why bonds are issued, and identify the types of bonds.
Accounting for Bond Issues
Question
Karson Inc. issues 10-year bonds with a maturity value of
$200,000. If the bonds are issued at a premium, this
indicates that:
a. the contractual interest rate exceeds the market
interest rate.
b. the market interest rate exceeds the contractual
interest rate.
c. the contractual interest rate and the market interest
rate are the same.
d. no relationship exists between the two rates.
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10-2
SO 4 Explain why bonds are issued, and identify the types of bonds.
Accounting for Bond Issues
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10-3
SO 4 Explain why bonds are issued, and identify the types of bonds.
Issuing Bonds at Face Value
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10-4
SO 4 Explain why bonds are issued, and identify the types of bonds.
Issuing Bonds at Face Value
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10-5
SO 4 Explain why bonds are issued, and identify the types of bonds.
Accounting for Bond Issues
6% Premium
8% Face Value
10% Discount
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10-6
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Accounting for Bond Issues
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10-7
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Issuing Bonds at a Discount
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10-8
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Issuing Bonds at a Discount
Total Cost of Borrowing
Illustration 10-12
Illustration 10-13
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10-9
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Issuing Bonds at a Discount
Question
Slide
10-10
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Accounting for Bond Issues
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10-11
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Issuing Bonds at a Premium
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10-12
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Issuing Bonds at a Premium
Total Cost of Borrowing
Illustration 10-15
Illustration 10-16
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10-13
SO 5 Prepare the entries for the issuance of bonds and interest expense.
Accounting for Bond Retirements
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10-14
SO 6 Describe the entries when bonds are redeemed.
Accounting for Bond Retirements
The carrying value of the bonds is the face value of the bonds less
unamortized bond discount or plus unamortized bond premium at the
redemption date.
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10-15
SO 6 Describe the entries when bonds are redeemed.
Accounting for Bond Retirements
Question
Slide
10-16
SO 6 Describe the entries when bonds are redeemed.
Accounting for Bond Retirements
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10-17
SO 6 Describe the entries when bonds are redeemed.
Accounting for Long-Term Notes Payable
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10-18
SO 7 Describe the accounting for long-term notes payable.
Accounting for Long-Term Notes Payable
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10-19
SO 7 Describe the accounting for long-term notes payable.
Accounting for Long-Term Notes Payable
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10-20
SO 7 Describe the accounting for long-term notes payable.
Accounting for Long-Term Notes Payable
Question
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10-21
SO 7 Describe the accounting for long-term notes payable.
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10-22
Statement Presentation and Analysis
Presentation
Illustration 10-18
Analysis
Two ratios that provide information about debt-paying
ability and long-run solvency are:
Analysis
Analysis
Illustrate: LG’s (KOR) had total liabilities of W39,048
billion, total assets of W64,782 billion, interest expense of
W778 billion, income taxes of W1,092 billion, and net
income of W2,967 billion.
Illustration 10-19
The FASB and IASB are currently involved in two projects that
have implications for the accounting for liabilities. The FASB
and IASB have identified leasing as one of the most
problematic areas of accounting. The joint project will initially
focus primarily on lessee accounting. One of the first areas to
be studied is, “What are the assets and liabilities to be
recognized related to a lease contract?” The main issue is
whether the focus should remain on the leased item or should
instead focus on the right to use the leased item. Finally, the
two standard-setting bodies are involved in a far-reaching
project to significantly change the approach used to account
for pensions.
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Present Value Concepts Related to Bond Pricing
Slide
10-32 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-33 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-34 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
The future amount ($1,000), the interest rate (10%), and the
number of periods (1) are known
Illustration 10A-2
Slide
10-35 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-36 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
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10-37 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
1) interest rate,
2) number of interest periods, and
Slide
10-38 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-39 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-40 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
TABLE 10A-2
Slide
10-41 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-42 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Slide
10-43 SO 9 Compute the market price of a bond.
Present Value Concepts Related to Bond Pricing
Required steps:
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10-48 SO 10
Effective-Interest Method of Bond Amortization
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10-50 SO 10
Effective-Interest Method of Bond Amortization
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10-52
SO 11
Straight-Line Amortization
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10-54
SO 11
Straight-Line Amortization
Slide
10-56 SO 12 Prepare entries for payroll and payroll taxes under U.S. law.
Payroll-Related Liabilities
Slide
10-58 SO 12 Prepare entries for payroll and payroll taxes under U.S. law.
Payroll-Related Liabilities
Slide
10-59 SO 12 Prepare entries for payroll and payroll taxes under U.S. law.
Payroll-Related Liabilities
Question
d. FICA taxes.
Slide
10-60 SO 12 Prepare entries for payroll and payroll taxes under U.S. law.
Copyright
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