Long Term Debt Flashcards
1
Q
What are the characteristic of term bonds?
A
They mature of a single date. Even if they are convertible or callable if they have a single day maturity they are term bonds.
Bonds that mature serially (annually etc) are not term bonds
2
Q
How is the amortization of bond discount reported in the SCF using indirect method?
A
In cash from operating as an addition
Eg Dr:Bond Interest Expense 430 Cr: Cash 400 Cr: Bond discount 30 The income is reduced by $430 but the impact on net operating CF is only $400 and therefore it is an addition.
