Long-term debt can be reported either (a) as a single amount, net of any discount or increased by any premium or (b) at its face amount accompanied by a separate valuation account for the discount or premium. Any portion of the debt to be paid during the upcoming year, or operating cycle if longer, should be reported as a current amount. Regarding amounts to be paid in the future, what additional disclosures should be made in connection with long-term debt?
Answer to relevant QuestionsEarly extinguishment of debt often produces a gain or a loss. How is the gain or loss determined?Why will bonds always sell at their price plus any interest that has accrued since the last interest date?A company issued 5%, 20-year bonds with a face amount of $100 million. The market yield for bonds of similar risk and maturity is 4%. Interest is paid semiannually. At what price did the bonds sell?Hoffman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par ...Universal Foods issued 10% bonds, dated January 1, with a face amount of $150 million on January 1, 2011. The bonds mature on December 31, 2025 (15 years). The market rate of interest for similar issues was 12%. Interest is ...
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