BONDS PAYABLE Flashcards
Master Bonds Payable's Treatment
When the effective rate is higher than the stated/nominal rate, is this a discount or premium?
Discount
When the stated/nominal rate is higher than the effective rate, is this a discount or premium?
Premium
When the nominal rate and effective rate is available, what type of note is it?
Interest Bearing Note
When the effective rate is available but the nominal rate is not available, what type of note is it?
Non Interest Bearing Note
How do you identify an interest bearing note with realistic rate?
When effective rate = nominal rate
How do you identify an interest bearing note with unrealistic rate?
When effective rate is not = to nominal rate
What is the initial measurement of a realistic rate?
Face amount
What is the subsequent measurement of realistic rate?
Face amount
What is the initial measurement of an interest bearing note with unrealistic rate?
Present Value
What is the subsequent measurement of an unrealistic bearing note with unrealistic rate?
Amortized Cost
What is the initial measurement of a non-interest bearing note?
Present Value
What is the subsequent measurement of a non-interest bearing note?
Amortized Cost
What is the initial measurement of a Lump Sum note?
Principal = PVF1
Interest = PVOA
What are the situations where you have to deduct accrued interest from the retirement price to find G/L on acquisition of Bonds Payable?
- If it is silent
- If it says “including”
What are the situations where you do not have to deduct accrued interest from the retirement price to find G/L on acquisition of Bonds Payable?
- Plus accrued interest
- If it says “excluding”
