Bonds Payable

Question 1

Is known as Bond Expenditure

Answer 1

Bond

Question 2

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.

Answer 2

Bond

Question 3

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).

Answer 3

Bond

Question 4

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.

Answer 4

Par Value

Question 5

Feature of the bond with a fixed rate of interest, payable to the bondholder.

Answer 5

Coupon rate

Question 6

It is the date at which the bind gets matured, and the principal amount that is paid to the bondholder.

Answer 6

Maturity date

Question 7

It is the value paid to the bondholder at the time of expiry of the term for which the bond is issued.

Answer 7

Redemption value

Question 8

TYPE OF BOND

It is a bond that matures on a single date.

Answer 8

Par value

Question 9

TYPE OF BOND

It matures in installments instead of a single one

Answer 9

Serial Bond

Question 10

TYPE OF BOND

It is secured by a claim on real properties

Answer 10

Mortgage Bond

Question 11

TYPE OF BOND

It is secured by shares and bonds of another entity

Answer 11

Collateral Trust Bond

Question 12

TYPE OF BOND

Type of bond not backed by any collateral

Answer 12

Debenture Bond/Unsecured bond

Question 13

TYPE OF BOND

It requires the bondholder to register his/her name in the books of the issuing entity.

Answer 13

Registered Bond

Question 14

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.

Answer 14

Coupon or Bearer Bond

Question 15

TYPE OF BOND

It can be exchanged for the shares of the issuing entity.

Answer 15

Convertible Bond

Question 16

TYPE OF BOND

It can be called in prior to its maturity.

Answer 16

Callable Bond

Question 17

TYPE OF BOND

It is a bond whereby another party promises to pay if the borrower fails to do so.

Answer 17

Guaranteed Bond

Question 18

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.

Answer 18

Fair value less transaction cost

Question 19

Bonds DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS, the transaction costs or bond issue costs shall be treated as an _____ immediately.

Answer 19

Expense

Question 20

The fair value of bonds payable is equal to the _____ of the future cash payment to settle the bond liability.

Answer 20

Present value

Question 21

After initial recognition, bonds payable is measured either:

Answer 21

a. at amortized cost, using the effective interest method

b. at fair value through profit or loss

Question 22

2 approaches in accounting for authorization and issuance of bonds:

Answer 22

a. Memorandum Approach

b. Journal Entry Approach

Question 23

In this approach, no entry is required upon the authorization of the entity to the issue bonds. Authorized bonds payable account is not maintained.

Answer 23

Memorandum Approach

Question 24

In this approach, a journal entry is made to record the authorized bonds payable.

Answer 24

Journal Entry Approach

Question 25

The interest rate that is written in the terms of a bond indenture is known as the...

Answer 25

stated, coupon or nominal rate

Question 26

this rate, which is set by the bond issuer, is expressed as as ______ of the bond's face value, also called the....

Answer 26

Percentage Par value, principal amount, or maturity value

Question 27

Refers to the repurchase of bonds that the company had previously issued to its investors.

Answer 27

Retirement of Bonds

Question 28

The issuer has the option to repurchase this bonds earlier if the bond is _____

Answer 28

Callable Bonds

Question 29

Are an entity's own bonds originally issued and reacquired but not cancelled.

Answer 29

Treasury Bonds

Question 30

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.

Answer 30

TRUE

Question 31

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.

Answer 31

TRUE

Question 32

Is a premature retirement of the old bonds through issuing new bonds.

Answer 32

Bond Refunding

Question 33

TRUE OR FALSE Refunding may be made on or before the date of maturity of the old bonds.

Answer 33

TRUE

Question 34

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.

Answer 34

TRUE

Question 35

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.

Answer 35

TRUE

Question 36

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.

Answer 36

TRUE