F4:M5: Bonds Part 2 Flashcards
(9 cards)
1
Q
Name two methods of amortizing bond premium (disount).
A
Note: The straight-line method is permitted under U.S. GAAP if not materially different from the effective interest method.
2
Q
What are the major disclosures for long-term debt?
A
- Maturity dates
- Interest rates
- Call and conversion privileges
- Assets pledged as security
- Borrower-imposed restrictions
3
Q
How is interest expense calculated?
A
4
Q
What is the Cash Interest Paid formula?
A
Cash Interest Paid = Face Value of Bond × Stated (Coupon) Interest Rate
5
Q
What is Interest Expense formula?
A
Interest Expense = Cash Interest Paid + Amortization of Discount
6
Q
What is the Borrower and Investor JEs for Bond Discount Amortization: Straight-Line Method?
A
7
Q
What is the Borrower and Investor JEs for Bond Premium Amortization: Straight-Line Method?
A
8
Q
What is the Borrower and Investor JEs for Bond Premium Amortization: Effective Interest Method?
A
9
Q
A
