16-8 Flashcards
1
Q
Calculate PV for a zero-interest note
=>so you can determine what amount is the liability (Notes Payable) and what amount is the equity (Contributed Surplus - Stock Warrants)
A
FV = - X (outflow)
N
Y = market rate
PMT = O !!
*Compute PV :) *
2
Q
Creating a schedule for zero-interest bearing note:
A
Cash paid (PMT) = 0 !
Effective interest = discount/premium (as there is no PMT to subtract the Interest expense from)
The discount/premium is added/subtracted from/to the CARRYING AMOUNT of the BOND
3
Q
Adjusting entry for a Note Payble zero interest (JE)
A
dr. interest Expense
cr. Note Payable - I guess it could be cr. Cash for a regular entry
4
Q
Warrants are with…
Options are with…
A
…bonds
…shares
