Bonds

Question 1

What is Bond Liability for a discounted Bond

Answer 1

It is Face Value - Discount. It is the Right-hand Line of effective interest table

Question 2

What is Bond Liability of a Premium Bond

Answer 2

It is Face value + Premium. It is the Right-hand Line of effective interest table

Question 3

What is a serial Bond

Answer 3

The Bond that mature in installment.

Question 4

What is debentures

Answer 4

Unsecured bonds

Question 5

What are secured bond

Answer 5

the bonds that are backed by commercial commodity, asset or security.

Question 6

How to find out FV of bonds when they only say FV of bonds is not know

Answer 6

If the warrants are detachable, the issue price of the bonds and warrants together should be allocated based on each component’s fair values on the issuance date. If they say bond fair value is not known, so warrants fair value will be known. you can value the bonds FV based on that.

Question 7

When you issue a new bond on face to retire the old one. What amount do you retire the old one at

Answer 7

Old Bond will be retired at carrying amount.

Question 8

What costs related to bond issuance you count as Bond Issuance Cost

Answer 8

1- Promotion Costs
2- Printing and Engraving
4- Underwriter’s commission

Question 9

Does Bond Issuance cost reduce the liability of Bond Issued at premium.

Answer 9

YES. It will be deducted from premium and will be added to the discount