FAR 14 - debt Flashcards
(14 cards)
The face value x the stated rate equals what?
The Interest payments
Where is a bond reported when its redeemed prior to maturity?
Income statement as part of continuing operations
Carrying Value -
Term or serial?
Bonds with a single maturity date at the end of the bond term?
TERM
6.5% Convertible bonds, callable beg in year 10
Term or serial?
Bonds with multiple maturity dates at regular intervals throughout their lives?
Serial
25,000 maturing annually beginning in year 4
Debenture or collateralized?
bonds with unsecured by collateral and backed by the issuer’s general credit?
Debenture
Debenture or collateralized?
bonds that are secured by specific assets
Collateralized
Which interest rate do you use under the effective interest method?
Stated or Market?
Market , sometimes called yield
Ordinary annuity or Annuity Due rate?
Are payments made at the end of each period?
Ordinary
Ordinary annuity or Annuity Due rate?
Payments are made at the beginning of each period
Annuity Due
Mandatorily redeemable financial instruments are classified as what if both of the following criteria are met:
(1) They are obligations to repurchase the firm’s equity shares or are indexed to such an obligation, and
(2) they require or may require the issuer to settle the obligation by transferring assets.
Liabilities
How do you determine the gain in a debt restructuring? The principal amount is reduced, and interest is waived.
Gain is when Future cash payments on the debt are less than the carrying value of the debt
Carrying value + Interest - Reduced principal + Interest
True or False?
Unamortized discounts are added to the carrying value when determining gain/loss from the disposal/retirement of bonds.
TRUE
When determining current liabilities, how do you classify a loan that violates the agreement, and the creditor has not waived the rights for the loan?
Current - whole amount
