FAR 5

Question 1

if interim effective tax rate is given and estimated annual tax rate is given which one can be used to calculate tax amount? if previous interim tax rate and current quarter tax rates are given which one can be used?

Answer 1

use current expected annual tax rate. if previous interim tax rate is given use that instead of annual.

Question 2

what rate is used to discount bond payments to find out Selling price of Bond?

Answer 2

Always use MARKET (YEILD) rate.
Market price of Bond = Present value of Principle + Present value of interest payments using MARKET (effective int) rate

Question 3

How to calculate Market rate if not given

Answer 3

Coupon rate DIVIDE by Price of bond = Market(yelid) rate

Question 4

How bond issuance cost is presented on Balance Sheet?

Answer 4

direct reduction to carrying value of the Bond

Question 5

How to calculate interest exp on Bond and int payable on the bond?

Answer 5

Interest expense = Carrying Value of Bond x Market rate
Interest Payable = Face Value of Bond x Stated rate
The difference of int exp and int payable is discount or Premium

Question 6

how bonds or notes due within one year are presented if there is an intent and ability to refinance as a longs term debt?

Answer 6

noncurrent lability with separate disclosure of the note financing

Question 7

What rate is used to calculate bond interest expense when there is Bond issue cost?

Answer 7

Effective rate includes Bond issue cost and
Market rate excludes Bond issue cost. so use effective rate.