FRA Non Current Liabities Flashcards
Amortisation
The process of allocating the cost of intangible long-term assets having finite useful life’s to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity
Coupon Rate
The interest rate promised in a contract; this is the rate used to calculate the periodic expense interest payments
Defined Benefit pension plans
Plans in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets
Defined contribution pension plans
Individual accounts to which an employee and typically the employee make contributions during their working years and expect to draw on the accumulated funds at retirement. The employee bears the investment and inflation risk of plan assets.
Direct financing leases
Under US GAAP, a type of finance lease, from a lesser perspective, where the present value of the lease payments (lease receivable) equals the carrying value of the leased asset. No selling profit is recognized at lease inception. The revenues earned by the lessor are financing in nature.
Effective Interest rate
The borrowing rate or market rate that a company incurs at the issuance of a bond
Face value
The amount of cash payable by a company to the bondholders when the bonds mature; the promised at maturity separate from any coupon payment
Finance Lease
From the lesser perspective, under US GAAP, a type of lease which is more akin to the purchase of an asset by the lessee. From the lessor perspective, under IFRS, a lease which transfers substantially all the risks and rewards incidental to ownership of an underlying asset
Lessee
The party obtaining the use of an asset through a lease
Lessor
The owner of an asset that grants the right to use the asset to another party
Market rate of interest
The rate demanded by purchases of bonds, given the risks associated with future cash payment obligations and of the particular bond issue
Non current liabilities
Obligations that broadly represent a probable sacrifice of economic benefits in periods generally greater than one year in the future
Operating lease
An agreement allowing a lessee to use some asset for a period of time; essentially a rental
Sales- Type Leases
Under US GAAP a type of finance lease, from a lessor perspective, where the present value of the lease payments (lease receivable) exceeds the carrying value of the lease asset. The revenues earned by the lessor both a selling profit at inception and financing interest revenues
