NCL 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”
What is the initial recognition for installments that are non-interest bearing?
- PV the installments (just like how to solve for interests)
TRUE OR FALSE:
You don’t include accrued interest when you pay the retirement price?
True
How do you find the unamortized discount for the year?
Face Amount
Less: CA as of the year
What is the treatment of bond issue costs when Fair Value option is not selected?
Deducted from Fair Value
(added to discount)
(deducted to premium)
What is the treatment of bond issue costs when Fair Value option is not selected?
Deducted from Fair Value
What is the treatment of bond issue costs when Fair Value option is selected?
Expense as incurred
How do you solve for semi-annual interest paid?
Principal x NR x months/6
Note: You divide it by 6 and not by 12 if semi-annual/
If the issue date is not the same as your sale date in bonds payable, how do you solve for the proceeds?
Fair Value (Initial Measurement if not given) + Accrued Interest
Accrued Interest = Interest Paid
If the issue date is not the same as your sale date in bonds payable, how do you solve for the Initial Measurement?
CA, beg +- Amortization
