Bonds Payable Flashcards
Is known as Bond Expenditure
Bond
Represents a promise to pay a sum of money at the designated maturity date, and periodic interest at a specified rate on its value at the date of maturity.
Bond
In layman’s term, it is simply a contract of debt whereby 1 party (issuer) borrows a certain amount of money from another party (investor/buyer).
Bond
Feature of the bond that refers to the value stated on the face of the bond, which represents the amount the company or government body promises to pay at the date of maturity.
Par Value
Feature of the bond with a fixed rate of interest, payable to the bondholder.
Coupon rate
It is the date at which the bind gets matured, and the principal amount that is paid to the bondholder.
Maturity date
It is the value paid to the bondholder at the time of expiry of the term for which the bond is issued.
Redemption value
TYPE OF BOND
It is a bond that matures on a single date.
Par value
TYPE OF BOND
It matures in installments instead of a single one
Serial Bond
TYPE OF BOND
It is secured by a claim on real properties
Mortgage Bond
TYPE OF BOND
It is secured by shares and bonds of another entity
Collateral Trust Bond
TYPE OF BOND
Type of bond not backed by any collateral
Debenture Bond/Unsecured bond
TYPE OF BOND
It requires the bondholder to register his/her name in the books of the issuing entity.
Registered Bond
TYPE OF BOND
It is an unregistered bond in the sense that the name of the bondholder is not recorded on the books of the issuing entity.
Coupon or Bearer Bond
TYPE OF BOND
It can be exchanged for the shares of the issuing entity.
Convertible Bond
TYPE OF BOND
It can be called in prior to its maturity.
Callable Bond
TYPE OF BOND
It is a bond whereby another party promises to pay if the borrower fails to do so.
Guaranteed Bond
Bonds Payable that are NOT DESIGNATED AT FAIR VALUE shall be measured initially at ________, which is directly attributable to the issuance of the said bond.
Fair value less transaction cost
Bonds DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS, the transaction costs or bond issue costs shall be treated as an _____ immediately.
Expense
The fair value of bonds payable is equal to the _____ of the future cash payment to settle the bond liability.
Present value
After initial recognition, bonds payable is measured either:
a. at amortized cost, using the effective interest method
b. at fair value through profit or loss
2 approaches in accounting for authorization and issuance of bonds:
a. Memorandum Approach
b. Journal Entry Approach
In this approach, no entry is required upon the authorization of the entity to the issue bonds. Authorized bonds payable account is not maintained.
Memorandum Approach
In this approach, a journal entry is made to record the authorized bonds payable.
Journal Entry Approach
The interest rate that is written in the terms of a bond indenture is known as the…
stated, coupon or nominal rate
this rate, which is set by the bond issuer, is expressed as as ______ of the bond’s face value, also called the….
Percentage
Par value, principal amount, or maturity value
Refers to the repurchase of bonds that the company had previously issued to its investors.
Retirement of Bonds
The issuer has the option to repurchase this bonds earlier if the bond is _____
Callable Bonds
Are an entity’s own bonds originally issued and reacquired but not cancelled.
Treasury Bonds
TRUE OR FALSE
The acquisition of treasury bonds calls for the same accounting procedures accorded to a formal retirement of bonds prior to the maturity date.
TRUE
TRUE OR FALSE
The difference between the acquisition cost and the carrying amount of the treasury bonds is treated as gain or loss on the acquisition of treasury bonds.
TRUE
Is a premature retirement of the old bonds through issuing new bonds.
Bond Refunding
TRUE OR FALSE
Refunding may be made on or before the date of maturity of the old bonds.
TRUE
TRUE OR FALSE
Where refunding is made ON the date of maturity for the old bonds, no accounting problem arises as this would simply call for the cancellation of the bond liability.
TRUE
TRUE OR FALSE
Where refunding is made PRIOR to maturity date of the old bonds, consideration must be given to the refunding charges of the old bonds.
TRUE
TRUE OR FALSE
The refunding charges include the unamortized bond discount or premium, unamortized bond issue cost, and redemption premium on the old bonds being refunded.
TRUE
