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Summary Ch 11 Non-Current Liabilities - Financial Accounting with International Financial Reporting Standards - FAC2 CA$10.02
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Summary Ch 11 Non-Current Liabilities - Financial Accounting with International Financial Reporting Standards - FAC2
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  • Course
  • FAC2
  • Institution
  • Hanzehogeschool Groningen (Hanze)
  • Book
  • Financial Accounting with International Financial Reporting Standards

Provides in-depth summary of chapter 11. topics include Types of Bonds, Bond Transactions, Long-Term Notes Payable, Effective-Interest Method of Bond Amortization, Straight-Line Amortization

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  • Unknown
  • February 12, 2024
  • 19
  • 2023/2024
  • Summary

Subjects

  • non current liabilites
  • bonds
  • bond amortization

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  • Hanzehogeschool Groningen (Hanze)
  • International Business and Management Studies
  • FAC2
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Content preview

Non-Current Liabilities
Chapter Number Chapter 11




Non-Current Liabilities 1

, 📖 Table of Contents

Outline
11.1 Overview of Bonds
Types of Bonds
Secured and Unsecured Bonds
Convertible and Callable Bonds
Bond Trading
Determining the Market Price of a Bond
11.2 Bond Transactions
Issuing Bonds at Face Value
Discount or Premium on Bonds
Issuing Bonds at a Discount
Issuing Bonds at a Premium
Redeeming Bonds
Redeeming Bonds at Maturity
Redeeming Bonds before Maturity
11.3 Accounting for Non-Current Liabilities
Long-Term Notes Payable
Mortgage notes payable
Lease Liabilities
Accounting for Lease Arrangements
11.4 Reporting & Analyzing Non-Current Liabilities
Analysis
Debt and Equity Financing
11.5 Effective-Interest Method of Bond Amortization
Amortizing Bond Discount
Amortizing Bond Premium
11.6 Straight-Line Amortization
Amortizing Bond Discount
Amortizing Bond Premium




11.1 Overview of Bonds

📍 Bonds are a form of interest-bearing note payable issued by companies,
universities, and governmental agencies.




Non-Current Liabilities 2

, Types of Bonds
Secured and Unsecured Bonds


📍 Secured bonds have specific assets of the issuer pledged as collateral for
the bonds.
→ Real estate: Mortgage Bond
→ Asset: sinking fund bond




📍 Unsecured bonds, also called debenture bonds, are issued against the
general credit of
the borrower.


Convertible and Callable Bonds


📍 Bonds that can be converted into ordinary shares at the bondholder’s
option are convertible bonds.




📍 Bonds that the issuing company can redeem (buy back) at a stated
currency amount (call price) prior to maturity are callable bonds.



Bond Trading
→ Bond prices are quoted as a percentage of the face value of the bond



⚠️ A company makes journal entries only when it issues or buys back
bonds, or when bondholders convert bonds into ordinary shares.



Determining the Market Price of a Bond
You need to determine the present value of the bond

Market price therefore is a function of the three factors that determine present value:

1. the amounts to be received



Non-Current Liabilities 3

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