1、14-1PowerPoint Authors:Susan Coomer Galbreath,Ph.D.,CPACharles W.Caldwell,D.B.A.,CMAJon A.Booker,Ph.D.,CPA,CIACynthia J.Rooney,Ph.D.,CPACopyright 2013 by The McGraw-Hill Companies,Inc.All rights reserved.Long-Term LiabilitiesChapter 1414-2Bond Financing债券融资Bonds do not affect owner control.Interest
2、on bonds is tax deductible可扣除可扣除.Bonds can increase return on equity.A114-3Bond TradingA1Bonds are securities that can be purchased or sold in the securities markets.They have a market value which is expressed as a percent of their par value.The closing price indicates that the IBM stock is being so
3、ld at 121.18%of face value.14-4Bond Issuing Procedures债券发行程序A114-5BondCertificateBond Selling PriceCorporationInvestorsBond IssuancesP1Transaction on the Bond Issue Date14-6Bond Interest PaymentsCorporationInvestorsBond Issue DateBond Interest PaymentsInterest Payment=Bond Par Value Stated Interest
4、Rate x TimeBond IssuancesTransactions during the bond lifeP114-7Bond Face ValueCorporationInvestorsBond IssuancesTransaction on the Maturity DateP114-8Issuing Bonds at Par平价发行债券On Jan.1,2013,a company issued the following bonds:Par Value:$800,000Stated Interest Rate:9%Interest Dates:6/30 and 12/31Ma
5、turity Date=Dec.31,2032(20 years)P114-9$800,000 9%year=$36,000Issuing Bonds at ParOn June 30,2013,the issuer of the bond pays the first semiannual半年的interest payment of$36,000.P1This entry is made every six months until the bonds mature到期到期.14-10Issuing Bonds at ParOn December 31,2032,the bonds matu
6、re and the issuer of the bond pays face value of$800,000 to the bondholders.P114-11Bond Discount or Premium债券折价或溢价P114-12Fila issues bonds with the following provisions:Par Value:$100,000Issue Price:96.454%of par valueStated Interest Rate:8%Market Interest Rate:10%Interest Dates:6/30 and 12/31Bond D
7、ate:Dec.31,2013 Maturity Date:Dec.31,2015(2 years)Issuing Bonds at a DiscountBond will sell at a discount.P214-13On Dec.31,2013,Fila should record the bond issue.Issuing Bonds at a DiscountPar value$100,000 Cash proceeds现金收入 96,454*Discount$3,546 *$100,000 x 96.454%Contra-LiabilityAccount负债备抵帐户P214-
8、14Maturity Value到期价值Carrying Value帐面价值Issuing Bonds at a DiscountP214-15$3,546 4 periods=$887(rounded)$100,000 8%=$4,000Fila will make the following entry every six months to record the cash interest payment and the amortization of the discount.Amortizing a Bond DiscountP214-16Amortizing a Bond Disc
9、ountP214-17Adidas issues bonds with the following provisions:Par Value:$100,000Issue Price:103.546%of par valueStated Interest Rate:12%Market Interest Rate:10%Interest Dates:6/30 and 12/31Bond Date:Dec.31,2013 Maturity Date:Dec.31,2015(2 years)Issuing Bonds at a PremiumBond will sell at a premium.P3
10、14-18Issuing Bonds at a PremiumPar value$100,000 Cash proceeds 103,546*Premium$3,546 *$100,000 x 103.546%Adjunct-LiabilityAccount附加负债帐户On Dec.31,2013,Adidas will record the bond issue as:P314-19Issuing Bonds at a PremiumMaturity ValueCarrying ValueAmortizing a Bond PremiumUsing the straight-line met
11、hod,the premium amortization will be$887(rounded)every six months.$3,546 4 periods=$887(rounded)P314-20Amortizing a Bond Premium$3,546 4 periods=$887(rounded)$100,000 12%=$6,000Adidas will make the following entry every six months to record the cash interest payment and the amortization of the disco
12、unt.P314-21Amortizing a Bond PremiumP314-22Bond PricingP2Cash Outflows related to Interest PaymentsCash Outflows for par value at end of Bond life 14-23Fila issues bonds with the following provisions:Par Value:$100,000Issue Price:?Stated Interest Rate:8%Market Interest Rate:10%Interest Dates:6/30 an
13、d 12/31Bond Date:Dec.31,2013 Maturity Date:Dec.31,2015(2 years)P2Present Value of a Discount Bond折价债券的现值14-24Present Value of a Discount BondTo calculate Present Value,we need relevant interest rate and number of periods.Semiannual rate=5%(Market rate 10%2)Semiannual periods=4(Bond life 2 years 2)$1
14、00,000 8%=$4,000P214-25Bond Retirement债券偿还Retirement of the Fila bonds at maturity for$100,000 cash.Because any discount or premium will be fully amortized at maturity,the carrying value of the bonds will be equal to par value.P414-26Bond RetirementRetirement of Bonds before MaturityCarrying Value R
15、etirement Price=GainCarrying Value Retirement Price=LossAssume that$100,000 of callable bonds will be retired on July 1,2013,after the first interest payment.The bond carrying value is$104,500.The bonds have a call premium of$3,000.P414-27Bond RetirementConversion of Bonds to StockOn January 1,$100,
16、000 par value bonds of Converse,with a carrying value of$100,000,are converted to 15,000 shares of$2 par value common stock.15,000 shares$2 par value per shareP414-28Note Maturity DateNote PayableCashCompanyLenderNote DateWhen is the repayment of the principal and interest going to be made?Long-Term
17、 Notes PayableC114-29Note Maturity DateCompanyLenderNote DateSingle Payment of Principal plus InterestLong-Term Notes PayableC1Single Payment of Principal plus Interest14-30Note Maturity DateCompanyLenderNote DateRegular Payments of Principal plus InterestRegular Payments of Principal plus InterestL
18、ong-Term Notes PayableC114-31Installment NotesOn January 1,2013,Foghog borrows$60,000 from a bank to purchase equipment.It signs an 8%installment note requiring 6 annual payments of principal plus interest.Compute the periodic payment by dividing the face amount of the note by the present value fact
19、or.C114-32Installment Notes with Equal Payments每期付款额相等的分期付款票据C114-33Installment Notes with Equal PaymentsLets record the first payment made on December 31,2013 by Foghog to the bank.Refer back to the amortization schedule to make the December 31,2014 payment on the note.P514-34Mortgage Notes and Bon
20、ds房屋抵押贷款票据与债券 A mortgage is a legal agreement that helps protect the lender if the borrower fails to make the required payments.It gives the lender the right to be paid out of the cash proceeds from the sale of the borrowers assets specifically identified in the mortgage contract.C114-35Global ViewA
21、ccounting for Bonds and NotesThe definitions and characteristics of bonds and notes are broadly similar for both U.S.GAAP and IFRS.The accounting for issuances of bonds,market pricing,and retirement of both bonds and notes is similar.Both U.S.GAAP and IFRS also allow companies to account for bonds a
22、nd notes using fair value.Accounting for Leases and PensionsBoth U.S.GAAP and IFRS require companies to distinguish between operating leases and capital leases;with IFRS calling the latter finance leases.The accounting and reporting for leases are broadly similar,with the main difference that the cr
23、iteria for identifying a lease as a capital or finance lease is more general under IFRS.For pensions,the methods of accounting and reporting are similar for both U.S.GAAP and IFRS.14-36Secured and Unsecured有抵押的与无抵押的 Term and Serial整期的与系列的Registered and Bearer记名的与不记名的Convertible and Callable可转换的与可回购的
24、Features of Bonds and NotesA214-37This ratio helps investors determine the risk of investing in a company by dividing its total liabilities by total equity.Debt-to-Equity RatioDebt-to-Equity RatioTotal LiabilitiesTotal Equity=A314-38Present Value of$1 RatePeriods3%4%5%1 0.9709 0.9615 0.9524 2 0.9426
25、 0.9246 0.9070 3 0.9151 0.8890 0.8638 4 0.8885 0.8548 0.8227 5 0.8626 0.8219 0.7835 6 0.8375 0.7903 0.7462 7 0.8131 0.7599 0.7107 8 0.7894 0.7307 0.6768 9 0.7664 0.7026 0.6446 10 0.7441 0.6756 0.6139 Appendix 14A:Present Values of Bonds and NotesFace amount=$100,000Contract rate=8%Market rate=10%Int
26、erest paid semiannually First,we calculate the present value of the principal repayment in 4 periods(2 years 2 payments per year,using 5%market rate(10%annual rate 2 payments per year).C214-39Present Value of Annuity of$1 RatePeriods3%4%5%1 0.9709 0.9615 0.9524 2 1.9135 1.8861 1.8594 3 2.8286 2.7751
27、 2.7232 4 3.7171 3.6299 3.5460 5 4.5797 4.4518 4.3295 6 5.4172 5.2421 5.0757 7 6.2303 6.0021 5.7864 8 7.0197 6.7327 6.4632 9 7.7861 7.4353 7.1078 10 8.5302 8.1109 7.7217 Appendix 14A:Present Values of Bonds and Notes$100,000 8%=$4,000Semiannual Interest Annuity Present AmountPV FactorValuePrincipal$
28、100,000 0.8227$82,270 Interest 4,000 3.5460 14,184 Issue price of debt$96,454 C214-40Appendix 14B:Effective Interest AmortizationP6Effective Interest Amortization of Bond DiscountStated Rate:8%Effective Rate:10%14-41Appendix 14B:Effective Interest AmortizationP7Effective Interest Amortization of Bon
29、d PremiumStated Rate:12%Effective Rate:10%14-42Appendix14C:Issuing Bonds Between Interest DatesAvia sells$100,000 of its 9%bonds at par on March 1,2013,60 days after the stated issue date.The interest on Avia bonds is payable semiannual on each June 30 and December 31.Stated Issuedate 1/1Date of sal
30、e 3/1First Interestdate 6/30$1,500 accrued$3,000 earnedBondholder pays$1,500 to issuerIssuer pays$4,500 to bondholderC314-43Appendix 14D:Leases and PensionsA lease is a contractual agreement between the lessor(asset owner)and the lessee(asset renter or tenant)that grants the lessee the right to use the asset for a period of time in return for cash(rent)payments.C414-44Appendix 14D:Leases and PensionsA pension is a contractual agreement between an employer and its employees for the employer to provide benefits(payments)to employees after they retire.C414-45End of Chapter 14
