中级财务会计英文版第九章课后题答案

Chapter14-BondsandLong-TermNotes14-1Chapter14BondsandLong-TermNotesQUESTIONSFORREVIEWOFKEYTOPICSQuestion14-1Periodicinterestiscalculatedastheeffectiveinterestratetimestheamountofthedebtoutstandingduringtheperiod.Thissameprincipleappliestotheflipsideofthetransaction,i.e.,thecreditor’sreceivableorinvestment.Theapproachalsoisthesameregardlessofthespecificformofthedebt–thatis,whetherintheformofnotes,bonds,leases,pensions,orotherdebtinstruments.Question14-2Long-termliabilitiesareappropriatelyreportedattheirpresentvalues.Thepresentvalueofaliabilityisthepresentvalueofitsrelatedcashflows–specificallythepresentvalueofthefaceamountofthedebtinstrument,ifany,plusthepresentvalueofstatedinterestpayments,ifany.Bothshouldbediscountedtopresentvalueattheeffective(market)rateofinterestatissuance.Question14-3Bondsandnotesareverysimilar.Bothtypicallyobligatetheissuingcorporationtorepayastatedamount(e.g.,theprincipal,parvalue,faceamount,ormaturityvalue)ataspecifiedmaturitydate.Inreturnfortheuseofthemoneyborrowed,thecompanyalsoagreestopayinteresttothelenderbetweentheissuedateandmaturity.Theperiodicinterestisastatedpercentageoffaceamount.Inconcept,bondsandnotesareaccountedforinpreciselythesameway.Normallyacompanywillborrowcashfromabankorotherfinancialinstitutionbysigningapromissorynote.Corporations,especiallymedium-andlarge-sizedfirms,oftenchoosetoborrowcashbyissuingbondsandinsteadofborrowingfromalendinginstitution,itborrowsfromthepublic.Abondissue,ineffect,breaksdownalargedebtintomanageableparts($1,000units)whichmakesitmoreattractivetoindividualandcorporateinvestors.Also,bondstypicallyhavelongermaturitiesthannotes.Themostcommonformofcorporatedebtisbonds.Question14-4Allofthespecificpromisesmadetobondholdersaredescribedinabondindenture.Thisformalagreementwillspecifythebondissue’sfaceamount,thestatedinterestrate,themethodofpayinginterest(whetherthebondsareregisteredbondsorcouponbonds),whetherthebondsarebackedbyalienonspecifiedassets,andwhethertheyaresubordinatedtootherdebt.Thebondindenturealsomightprovideforredemptionthroughacallfeature,byserialpayments,throughsinkingfundprovisions,orbyconversion.Italsowillspecifythetrustee(usuallyacommercialbankorotherfinancialinstitution)appointedbytheissuingfirmtorepresenttherightsofthebondholders.Thebondindentureservesasacontractbetweenthecompanyandthebondholder(s).Ifthecompanyfailstoliveuptothetermsofthebondindenture,thetrusteemaybringlegalactionagainstthecompanyonbehalfofthebondholders.Chapter14-BondsandLong-TermNotes14-2AnswerstoQuestions(continued)Question14-5InorderforBrandontosellitsbondsthatpayonly11.5%statedinterestina12.25%marketthebondswouldhavetobepricedatadiscountfromfaceamount.Thediscountwouldbetheamountthatcausesthebondissuetobepricedtoyieldthemarketrate.Inotherwords,aninvestorpayingthatpricewouldearnaneffectiverateofreturnontheinvestmentequaltothe12.25%marketrate.Question14-6Thepricewillbethepresentvalueoftheperiodiccashinterestpayments(faceamountxstatedrate)plusthepresentvalueoftheprincipalpayableatmaturity.Bothinterestandprincipalarediscountedtopresentvalueatthemarketrateofinterestforsecuritiesofsimilarriskandmaturity.Question14-7Inastrictsense,it’struethatzero-couponbondspaynointerest.“Zeros”offerareturnintheformofa“deepdiscount”fromthefaceamount.Still,interestaccruesattheeffectiveratetimestheoutstandingbalance,butnointerestispaidperiodically.So,interestonzero-couponbondsisdeterminedandreportedinpreciselythesamemannerasoninterest-payingbonds.Undertheconceptofaccrualaccounting,theperiodiceffectiveinterestisunaffectedbywhenthecashactuallyispaid.Corporationscandeductfortaxpurposestheannualinterestexpense,butwithoutcashoutflowuntilthebondsmature.Question14-8Whenbondsareissuedatapremiumthedebtdeclineseachperiodbecausetheeffectiveinteresteachperiodislessthanthecashinterestpaid.The“overpayments”eachperiodreducethebalanceowed.Thisispreciselytheoppositeofwhendebtissoldatadiscount.Inthatcase,theeffectiveinteresteachperiodismorethanthecashpaid,andthe“underpayment”ofinterestaddstotheamountowed.Chapter14-BondsandLong-TermNotes14-3AnswerstoQuestions(continued)Question14-9Bytheeffectiveinterestmethod,interestexpenseisrecordedeachperiodastheeffectivemarketrateofinterestmultipliedbytheoutstandingbalanceofthedebt(duringtheinterestperiod).Thissimplyisanapplicationoftheaccrualconcept,consistentwithaccruingallexpensesastheyareincurred.Thedifferencebetweentheinterestexpenseandtheinterestpaidincreases(ordecreases)theexistingbondliabilityandisreflectedas“amortization”ofthediscount(orpremium).Anexceptiontotheconceptuallyappropriatemethodofdetermininginterestforbondissuesisthestraight-linemethod.Companiesareallowedtodetermineinterestindirectlybyallocatingadiscountorapremiumequallytoeachperiodoverthetermtomaturityifdoingsoproducesresultsthatarenotmateriallydifferentfromtheeffectiveinterestmethod.Thefirm’sdecisionshouldbeguidedbywhetherthestraight-linemethodwouldtendtomisleadinvestorsandcreditorsintheparticularcircumstance.Thestraight-linemethodresultsinaconstantdollaramountofinterestexpenseeachperiod.Byt