Acct410 exam guide - Study guides, Class notes & Summaries

Bonds Payable Arise from a contract called a bond indenture -Represent a promise to pay the principle at maturity and periodic interest based on the stated interest rate and the face value of the bond Valuation of Bonds Payable PV of the principle and periodic interest (PV of FCF) -stated rate = effective/yield (par) -stated rate < effective (discount) -stated rate > effective (premium) Accounting for the Issuance of Bonds 1. Calculate PV (determine issue price) 2. Record bond i...

Preferred Stock Characteristics Usually issued AT par & has more debt characteristics than equity 1. Preference to Dividends -% of par value (%*face) -cumulative preferred tock ("earned" NOT accumulated, "in arrears") - participating preferred stock (shares in C/S dividends) 2. Preference to assets in a liquidation -creditors, preferred stock, common stock

Leases Convey the use of an asset from an owner (lessor) to a user (lessee) for a specific period of time at a specific rate -MUST capitalize if longer than 12 months Lease Classification Test for LESSEES/LESSORS (is it a finance/sales lease?) 1. Lease transfers titles from lessor to lessee at the end of the lease term 2. Lease contains a bargain purchase option (BPO) 3. Lease term >= 75% of the estimated economic life of leased asset -TIME test 4. PV of lease payments >= 90% of F...