| Bonds: Premium or Discount?
Mkt (Yield) > Coupon Rate | Discount |
| Bonds: Premium or Discount?
Mkt (Yield) < Coupon Rate | Premium |
| Bonds: Issuance Journal Entry
Include Bond Issuance Costs | DR: Cash
DR: Discount + Bond Issue Costs
CR: Premium - Bond Issue Costs
CR: Bonds Payable (Always Face) |
| Bonds: Methods of Amortization | 1) Straight-Line (GAAP tolerated, IFRS NO)
2) Effective-Interest (GAAP and IFRS required) |
| Bonds: Effective Interest Method Calculation | Face x Coupon = Cash Paid
CV x Mkt Rate= Interest Expense
Int Expense - Cash Paid = Amort
Amort always goes towards Face |
| Bonds: Straight-Line Amortization | Find difference between Face and Premium or Discount
Divide difference by bond duration |
| Bonds: Journal Entry for Interest Payments | DR: Interest Expense
DR: Premium on BP
CR: Discount on BP
CR: Cash |
| Troubled Debt Restructuring: Debtor
Asset Transfer Calculation | FV assets transferred - NBV assets transferred = G/L (mark to mkt FV)
CV of payable = FV assets transferred = Gain on Concession |
| Troubled Debt: Debtor
Asset Transfer Calculation | CV of payable = FV equity transferred = Gain on Concession |
| Troubled Debt: Creditor | Recognize Bad Debt Expense |
| Troubled Debt: Debtor
Modification of Terms | Prospectively and no gain or change in CV UNLESS CV > total future cash payments |
| Bonds: Finding Selling Price vs Issue Price | Selling Price uses Mkt Yield Rate
Issue Prices uses Coupon/Stated Rate |
