Xem mẫu
Chapter 10
Reporting and interpreting Bonds
PowerPoint Authors:
Susan Coomer Galbreath, Ph.D., CPA Charles W Caldwell, D.B.A., CMA
Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA
McGrawHill/Irwin Copyright © 2014 by The McGrawHill Companies, Inc. All rights reserved.-1
Characteristics of Bonds Payable
Two types of cash payment in the bond contract: 1. Principal.
2. Cash interest payments.
Bond Terms
1. Principal, par value and face value
2. Contract, stated, or coupon rate of interest
3. Market, yield, or effective-interest rate
10-2
Reporting Bond Transactions
Present Value of the Principal (a single payment)
+ Present Value of the Interest Payments (an annuity) = Issue Price of the Bond
Interest Bond
Rates Price
Accounting for
the Difference
Stated Market Bond Rate Rate Price
Stated Market Bond Rate Rate Price
Stated Market Bond Rate > Rate Price
=
<
>
Par Value of the Bond
Par Value of the Bond
Par Value
of the Bond
There is no difference to account for.
The difference is accounted for as a bond discount.
The difference is accounted for as a bond premium.
10-3
Bonds Issued at Par
On January 1, 2014, AT&T issues $100,000 in bonds having 10% annual stated rate of interest. The bonds mature in 2 years and interest is paid semiannually. The market rate is 10% annually.
Interest Bond Accounting for
Rates Stated Market
Rate Rate
=
Bond bo Par Value ed There is no difference Price of the Bond to account for.
=
GENERAL JOURNAL
Date Description Debit Credit
Jan 1 Cash (+A)
Bonds Payable (+L)
100,000
100,000
10-4
Bonds Issued at Par
Here is the entry made every six months to record the interest payment.
GENERAL JOURNAL
Date Description Debit Credit Bond Interest Expense (+E, -SE) 5,000
Cash (-A) 5,000
Here is the entry to record the maturity of the bonds.
GENERAL JOURNAL Date Description
Bonds Payable (-L)
Cash (-A)
Debit
100,000
Credit
100,000
10-5
...
- tailieumienphi.vn
nguon tai.lieu . vn