中级会计学知识.ppt

Bonds and Long-Term Notes,9,Bonds,At Bond Issuance Date,Company Issuing Bonds,Investor Buying Bonds,Recording Bonds at Issuance,On January 1,2011,Masterwear Industries issued$700,000 of 12%bonds.Interest of$42,000 is payable semiannually on June 30 and December 31.The bonds mature in three years.The entire bond issue was sold in a private placement to United Intergroup,Inc.at face amount.,At Issuance(January 1),Masterwear(Issuer)Cash700,000Bonds payable 700,000,United(Investor)Investment in bonds(face amount)700,000Cash 700,000,Determining the Selling Price,Determining the Selling Price,On January 1,2011,Masterwear Industries issued$700,000 of 12%bonds,dated January 1.Interest is payable semiannually on June 30 and December 31.The bonds mature in three years.The market yield for bonds of similar risk and maturity is 14%.The entire bond issue was purchased by United Intergroup.,Because interest is paid semiannually,the present value calculations use:(a)the semiannual stated rate(6%),(b)the semiannual market rate(7%),and(c)6(3 x 2)semi-annual periods.,Present value of an ordinary annuity of$1:n=6,i=7%,present value of$1:n=6,i=7%,Bonds Issued at a Discount,Masterwear(Issuer)Cash666,633Discount on bonds payable 33,367Bonds payable 700,000,United(Investor)Investment in bonds 700,000Discount on bond investment 33,367Cash 666,633,Determining Interest Effective Interest Method,Interest each period is recorded as the effective market rate of interest multiplied by the outstanding balance of the debt(during the interest period).,Interest is recorded as expense to the issuer and revenue to the investor.For the first six-month interest period the amount is calculated as follows:$666,633(14%2)=$46,664Outstanding Balance Effective Rate Effective Interest,Recording Interest Expense,The effective interest is calculated each period as the market rate times the amount of the debt outstanding during the interest period.,At the First Interest Date(June 30),Masterwear(Issuer)Interest expense46,664Discount on bonds payable 4,664Cash 42,000,United(Investor)Cash42,000Discount on bond investment 4,664Investment revenue 46,664,$700,000(12%2)=$42,000,$666,633(14%2)=$46,664,$46,664-$42,000=$4,664,Bond Amortization Schedule,Here is a bond amortization schedule showing the cash interest,effective interest,discount amortization,and the carrying value of the bonds.,$666,633+$4,664=$671,297,Bond Issued at Premium,On January 1,2011,Masterwear Industries issued$700,000 of 12%bonds,dated January 1.Interest is payable semiannually on June 30 and December 31.The bonds mature in three years.The market yield for bonds of similar risk and maturity is 10%.The entire bond issue was purchased by United Intergroup.,Present value of an ordinary annuity of$1:n=6,i=6%,present value of$1:n=6,i=5%,Premium Amortization Schedule,Here is a bond amortization schedule showing the cash interest,effective interest,premium amortization,and the carrying value of the bonds.,$735,533-$5,223=$730,310,$735,533 5%=$36,777,Bonds Sold at a Premium,Masterwear(Issuer)Cash735,533Premium on bonds payable 35,533Bonds payable 700,000,United(Investor)Investment in bonds 700,000Premium on bond investment 35,533Cash 735,533,Interest expense and interest revenue will be recognized in a manner consistent with bonds issued at a discount.,Premium and Discount Amortization Compared,1/1/11,12/31/13,$700,000,$735,533,$666,633,Premium Amortization,Discount Amortization,When Financial Statements Are Prepared Between Interest Dates,On Mar 1,2011,Masterwear Industries issued$700,000 of 12%bonds.Interest is payable semiannually on Aug 31 and Feb 28.The bonds mature in three years.The market yield for bonds of similar risk and maturity is 14%.The entire bond issue was purchased by United Intergroup at a cost of$666,633.,$700,000(12%2)=$42,000,$666,633(14%2)=$46,664,Semi-annual Stated Interest,Aug 31,2011 Effective Interest,When Financial Statements Are Prepared Between Interest Dates,before the second interest date of Feb 28,so we must accrue interest for 4 months from Aug 31 to Dec 31.,Year-end accrual of interest expense and interest income.,Masterwear(Issuer)Interest expense31,327Discount on bonds payable 3,327Interest payable 28,000,United(Investor)Interest receivable28,000Discount on bond investment 3,327Investment revenue 31,327,$42,000 4/6=$28,000,$671,297 7%4/6=$31,327,$31,327-$28,000=$3,327,When Financial Statements Are Prepared Between Interest Dates,On Feb 28,the next interest payment date,the following entries would be recorded.,Masterwear(Issuer)Interest expense23,496Interest payable21,000Discount on bonds payable 2,496Cash 42,000,United(Investor)Cash42,000Discount on bond investment 2,496Interest receivable21,000Investment revenue 23,496,Long-Term Notes,Bank,PromissoryNote(Note Payable),Company(Borrower),Property,goods,or services.,The liability,long-term note payable,is reported at its present value,similar to the accounting for bonds payable.,Long-Term Notes,On January 1,2011,Skill Graphics,Inc.borrowed$700,000 cash from First Bank and issued a 3-year,$700,000 promissory note.Interest of$42,000 was payable semiannually on June 30 and December 31.,January 1,At Issuance,Cash700,000long-term Note payable 700,000,Long-Term Notes,At Each of the Six Interest Dates,At Maturity,Interest expense 42,000Cash 42,000,long-term Notes payable700,000Cash 700,000,Installment Notes分期付款,To compute cash payment use present value tables.Each payment includes both an interest amount and a principal amount.Interest expense or revenue:Effective interest rate Outstanding balance of debt Interest expense or revenuePrincipal reduction:Cash amount Interest component Principal reduction per period,Installment Notes,On January 2,2011,Matrix Inc.leased an equipment(fair value is 2,500,000,useful life is 5 years)for 3 years.900,000 lease expenses to be paid on December 31,each year.The market rate of interest is 8%.Prepare the required journal entries for Matrix Inc.2,319,390/2,500,000=Called:financing lease 融资租赁,Equipment_ financing lease 2,319,390Discount on payable 380,610 long-term payable(长期应付款)2,700,000,At the lease Date(January 1),Installment Notes,Installment Notes,Installment Notes,On Dec 31,2011,Interest expense 185,551.20 Discount on payable 185,551.20 long-term payable 900,000Cash 900,000,Installment Notes,On Dec 31,2012,Interest expense 128,395.3 Discount on payable 128,395.3 long-term payable 900,000Cash 900,000,Installment Notes,On Dec 31,2013,Interest expense 66,663.5 Discount on payable 66,663.5 long-term payable 900,000Cash 900,000,Early Extinguishment of Debt提前清偿债务,Debt retired at maturity results in no gains or losses.,Debt retired before maturity may result in an gain or loss on extinguishment.Cash Proceeds Book Value=Gain or Loss,BUT,Early Extinguishment of Debt,Illustration On January 1,2011,Masterwear Industries called its$700,000,12%bonds when their carrying amount was$676,290.The indenture specified a call price of$685,000.The bonds were issued previously at a price to yield 14%.,Masterwear(Issuer)Bonds payable700,000Loss on early extinguishment 8,710Discount on bonds payable 23,710Cash 685,000,Convertible Bonds可转换债券,Some bonds may be converted into common stock at the option of the holder.包括负债成份(该债券的现值)和权益成份(发行价格扣除负债部分).负债成份需按照实际利率确认费用.,Bonds into Stock,Convertible Bonds,On January 1,2011,HTL Manufacturers issued$100,000,000 of 6%convertible debentures,5 years,market rate is 9%.The bonds are convertible at the option of the holder into$1 per common stock at a conversion ratio of 10 shares per$100 bond.,At Issuance,January 1,2011,Cash 100,000,000Discount on Convertible bonds payable 11,671,800Convertible bonds payable 100,000,000contributed surplus(资本公积)11,671,800,At Issuance,January 1,2011,88,328,200*9%=7,949,538100,000,000*6%=6,000,000Interest expense 7,949,538 Discount on Convertible bonds payable 1,949,538 Interest payable 6,000,000,On Dec 31,2011,Convertible Bonds,Assume the bondholder exercise their option to convert the bonds into shares of stock on Jan 1,2012,Convertible bonds payable 100,000,000contributed surplus 11,671,800 Paid-in capital 10,000,000 Discount on Convertible bonds payable 9,722,262 contributed surplus 91,949,538,100,000 bonds/100 10 shares$1 par=$10,000,000 per value,Troubled debt restructuring 债务重组,troubled debt restructuring:When changing the original terms of a debt agreement is motivated by financial difficulties experienced by the debtor.,Troubled debt restructuring,A troubled debt restructuring may be achieved in either of two ways:1.The debt may be settled at the time of the restructuring.2.The debt may be continued,but with modified terms.,Debt Is Settled 清偿债务,The payment to settle a debt in a troubled debt restructuring might be cash,or a non-cash asset,or even shares of the debtors stock.,Debt Is Settled,Eagle Boats agrees to settle Matrix Inc.$30 million debt in exchange for property having a fair value of$20 million.The carrying amount of the property on Matrixs books is$17 million:($in millions)Land($20 million minus$17 million).3 Gain on disposition of assets.3Account payable(carrying amount).30 Gain on troubled debt restructuring(营业外收入_债务重组利得)10Land(fair value).20,Debt Is Settled,Eagle Boats agrees to settle Matrix Inc.1,000,000 debt in exchange for equipment having a fair value of 900,000.Eagle Boats has recorded 40,000 of allowance for uncollectible accounts.The initial cost of the equipment is 1,100,000,accumulated depreciation is 400,000.Prepare the journal entry for Matrix IncAccount payable 1,000,000 Accumulated depreciation 400,000Fixed assets_ equipment 1,100,000Non-operation revenues_ sale of equipment 200,000Gain on troubled debt restructuring(营业外收入_债务重组利得)100,000,Prepare the journal entry for Eagle Boats Fixed assets_ equipment 900,000loss on troubled debt restructuring(营业外支出_债务重组损失)60,000allowance for uncollectible accounts 40,000 Account receivable 1,000,000,Debt Is Settled,Eagle Boats agrees to settle Matrix Inc.1,000,000 debt in exchange for inventories having a fair value of 800,000,the cost is 500,000.Eagle Boats has recorded 120,000 of allowance for uncollectible accounts.The initial cost of the equipment is 1,100,000,accumulated depreciation is 400,000.Prepare the journal entry for Matrix IncAccount payable 1,000,000 Sales revenues 800,000Gain on troubled debt restructuring(营业外收入_债务重组利得)200,000The cost of goods sold 500,000 inventory 500,000,Prepare the journal entry for Eagle Boats Inventory 800,000loss on troubled debt restructuring(营业外支出_债务重组损失)80,000allowance for uncollectible accounts 120,000 Account receivable 1,000,000,Debt Is Continued,but with Modified Terms 修改债务条件,Brillard Properties owes First Prudent Bank$30 million under a 10%note with two years remaining to maturity.Due to financial difficulties of the developer,the previous years interest($3 million)was not paid.First Prudent Bank agrees to:1.Forgive the interest accrued from last year.2.Reduce the remaining two interest payments to$2 million each.3.Reduce the principal to$25 million.($in millions)Accrued interest payable.4 Gain on debt restructuring(营业外收入_债务重组利得).4,At Each of the Two Interest Dates($in millions)Accrued interest payable.2 Cash(revised interest amount).2At MaturityNote payable.25 Cash(revised principal amount).25,End of Chapter 9,