Far Bonds module 4 Flashcards
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Contingent liabilities dicounted should be dislcosed at what value and when
When with recourse and at their maturity value by the person issuing with recourse they maintain liability if other person is unable to collect
When given a note payable with the amount of the full note and the principal payments and interest rate-how calc accrued interest payable
Take the full amount of the note less the first interest payment then take that amount and multiply it by the interest rate and the number of months remaining in year
The amount of accrued interest receivable that the company that is issuing the mortgage should charge is the amount of the loan times the interest rate on the loan and the months held
Interest earned is calculated as the proceeds times the present value write and the difference between interest earned is amortized and deferred
To calculate the cash received on bonds
Take the cash price paid times number of bonds issues then add accrued interest payable by the face value of the bond times the coupon rate times portion of the year held then deduct any bond issues costs and this is the amount of cash received.
When lease rates fluctuate at what rate do you report them at
On a straight line basis after taking the average and dividing
When calcukating sales taxes paid and sales revenue when given a tax rate and given the amount of sales and payments
Take the sales revenue and divide by 1+ the tax rate then multiply that amount times the tax rate then subtract any amounts debited for already paid this is your sales tax payable and the first number calculates is your sales revenue
Whenn calculting a loss on early extinguishmentnof bonds how
Take face value of bonds being retired subtract out amortization of discount by pro rata share take amounts of bonds being retired in numerator/ total bonds in denominator then multiply by aamortizedd. bond issue costs then subtract by premium reacquired and this is your lsoss
When assets are transferred in a troubled debt restructuring the assets transferred is written down to fair value then a ordinary gain or loss is recorded
After this the gain or loss recorded on debt restructuring is the difference between debt and fair value of asset transferred
Calculating a loss on bond retirement when issued at a discount and retired at a premium
1-calc the discount. Then calc the difference between faace value and discount. How much time has gone by and how long were bonds for create a ratio of what is left on bond discount that hasn’t been amortized multiply that times discount and deduct for face value. Do the same thing if it gives you bond issue costs this will give you the net carrying value you can then subtract this from the premium price you reacuired it for to get the loss
When stated rate of interest is less than effective rate of interest
1st this means issued at a disocunt is stated rate is less than effective rate amount recorded for interest expense will be greater thanthan the amount actually paid for the interest
Bennett Inc. issues 100 4% coupon, $1,000 par value bonds maturing in 5 years. The bonds are issued at a price of $92,488 and the market rate for comparable bonds is 5.75%.
Assuming that Bennett uses the straight-line method of amortization, interest expense for Year 2 is closest to:
5500
Calculated as such first see what the difference is between face value and discount price then take that discount and divide by five years then take face value of bond times coupon rate to get interest payable and add that to the annual dicount
Use the yield when calculating present value of the bonds for interest rate use the yield rate then use coupon rate times face value
Remember to use present value in the table not future value
credit right of use asset amortization to reduce it
and debit lease liability to reduce it
When calculating interest expense pay attention to the months that are in the year calculating
And the months in the term of lease
If a lease pays annual and its asking about the reduction in the lease carrying value
There will be no interest in year one if pay annual so year 2 will be the first interest payment and that first reduction in the carrying value.
For what the lessor should include in the lease expense when given lease improvements first month last month and refundable security deposit
Take length of lease in years times months and then divide the improvements by months add this amortization of improvements to the first months rent that will be what you include as your expense
For a troubled debt restructuring involving only a modification of terms, which of the following items specified by the new terms would be compared to the carrying amount of the debt to determine if the debtor should report a gain on restructuring?
Total future cash payments
To calculate an estimated warranty liability you take
The percentage of estimate in first year and second year for each year given and add those amounts all together then subtract actual warranty costs incurred.
Pay attemtion to queestions regarding fica and witholding
If it says x amount has been withheld already then you only need to calculate the additional that has not been withheld
A lease with a bargain purchase option that lessee is reasonably certain to exercise what impact will it have on cash flow from operations
the variable lease payments not included will negatively impact
To caalculate stated interest rate on bonds when given cash paid interest expense and carrying value and face value of bonds
The cash paid for the interest expense and divide by the face value of the bonds. The gaap interest rate would be interest expense/ carrying value of the bond. don’t forget to multiply this rate by two if given that it is semianual
When given bonds that pay interest quarterly how do you account for the total proceeds at issuance if given a discount face value
1) Take the number of bonds and multiply by value of bonds and discount rate that is what bond issues for
Then take the bond face value times number of bonds times stated interest rate then divide by four to get the quarterly interest paid. Look to months to see how many months have gone by for quarters then multiply the amount 2/3 or whatever amount times the interest then add that to the price at issuance
Estimated liabilities when given box tops or item to redeem with cash
1) Take the estimated redeem percentage multiplied by amount shown
Less the actual amount redeemed
Divide by the number that they need to use to reddem
Then multiply by what it cost you for each item less what they pay you this is estimated liability
When a piece of equipment is leased to calculate the value of that equipment in someones balance sheet you would
Take the payment required if it is at the beginning it will be an annuity due factor you will use
Then you will take the residual value and it will be the present value of a dollar since a one time payment add them together and that is the value of the equipment on the balance sheet
In a finance lease the reduction of the lease liability should equal
The value of the liability at the end of the previous year
To calculate real estate taxes payable when you have two equal installments and pay on novermber 1 but asssed taxes for fiscal year ended in june and have two payments of 12000
You take july and august multiply that by the 24000 payment time 2/12
Then September by 1/12
and October by 1/12 add all those and those are the amount that will be debited to taxes payable
When looking at your accounts payable balance
Look at when items were mailed out if you incurred the amount but haven’t sent it out it should still show as a value in your accounts payable
Footnote disclosures required when reasonable possible
Only accrue an amount when probaable and know the value
To calculate a lease price when part of the year is free first take
Amount of monthly lease times the amount of payments
Then multiply the year the lease spans by 12 divide the first number by this then multiply by the months you used the lease for.
TBS Hints journal entry correcting accrued interest payable
If you report interest expense as accrued interest payable you need to debit retained earnings as it will be overstated and credit to accrued interest payable as it should be credited not debited
For the asset retirement cost aand obligation to calculate the present value in a task based simulation
Then to calculate the total accfretion given over five years you take
Use the risk free credit rate that the company is provided to calculate the present value
The future value of ARO given less the present value you calculated and that it total accretion over five years
Escrow liability beginning plus receipts plus interest earned less payments for taxes
is the calculation for ending escrow liability
