Bond Issuance

Question 1

If bonds and stock warrants are known

Answer 1

the Total bond is prorated between both based on relative value

Question 2

If only ONE of the bond and stock warrants are known

Answer 2

Known value = used for reporting

Unknown value = assigned to other item

Question 3

Any interest prior to issuance

Answer 3

is added to the face value of the bond

Question 4

If a loan comes due within the current year - it must be shown as a current liability unless

Answer 4

the company can show that it has the ability and intent to refinance

Question 5

Intent to refinance can be shown by

Answer 5

1) refinancing the debt prior to issuance of Financial Statements or
2) Obtaining a Non-Cancelable agreement to refinance by the issuance date

Question 6

If the bond was sold lower than market rate

Answer 6

buyers would not buy the bond without demanding a higher rate of return.