中级会计学英文课件 (5)
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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:
. . . Resulting from past transactions or events.
v Some liabilities are not contractual obligations and may not be payable in cash.
Notice that the definition of a liability involves the present, the future, and the past. It is a present responsibility, to transfer assets or services in the future, caused by a transaction or other event that already has happened.
14 - 20
© 2013 The McGraw-Hill Companies, Inc.
• Financial liabilities that are held-for-trading must be measured at fair value at the end of each reporting period.
– An accounting mismatch exists between financial assets and financial liabilities.
– Management of financial assets and liabilities requires the use of fair value information.
CH 14
Bonds and Long-Term Notes
14 - 1
Probable future transfer of economic benefits . . .
. . . Arising from present obligations to other entities . . .
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7% × $666,633 $46,664 – 42,000
6% × $700,000
$666,633 + 4,664
© 2013 The McGraw-Hill Companies, Inc.
$48,544 is rounded to cause outstanding balance to be exactly $700,000 on 12/31/14.
© 2013 The McGraw-Hill Companies, Inc.
14 - 16
© 2013 The McGraw-Hill Companies, Inc.
14 - 17
© 2013 The McGraw-Hill Companies, Inc.
14 - 18
© 2013 The McGraw-Hill Companies, Inc.
14 - 19
© 2013 The McGraw-Hill Companies, Inc.
Determining interest by allocating the discount (or premium) on a straight-line
basis is NOT permitted under IFRS, although it is allowed under U.S. GAAP
14 - 14
© 2013 The McGraw-Hill Companies, Inc.
principal
14 - 15
In some countries, these bonds are attractive to investors as tax is not paid on the zero cash coupons!
(i.e. at par).
At Issuance (January 1)
14 - 6
© 2013 The McGraw-Hill Companies, Inc.
14 - 7
© 2013 The McGraw-Hill C12, 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%.
reflected as a reduction in the discount (a valuation account).
14 - 10
© 2013 The McGraw-Hill Companies, Inc.
The effective interest is calculated each period as the effective interest rate times the amount of the debt outstanding during the interest period.
The entire bond issue was purchased by United Intergroup.
Present value of an ordinary annuity of $1: n=6, i=7%
present value of $1: n=6, i=7%
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.
14 - 8
© 2013 The McGraw-Hill Companies, Inc.
14 - 9
© 2013 The McGraw-Hill Companies, Inc.
Interest accrues on an outstanding debt at a constant percentage of the debt each period. Interest each period is recorded as the effective interest rate multiplied by the outstanding balance of the
• A company is not required to, but has the option to measure, non-trading financial assets and liabilities, including bonds and notes, at fair value if any of the following conditions exist.
14 - 2
© 2013 The McGraw-Hill Companies, Inc.
Creditors’ interests in a company’s assets. Obligation for future payments at specified (or
estimated) amounts, at specified (or projected) dates. Interest accrues on debt over time. Periodic interest is the effective interest rate times the amount of the debt outstanding during the interest period. Debt is reported at the present value of principal and/or interest payments, discounted at the effective rate of interest at issuance.
reduces the discount to $28,703 on June 30.
14 - 12
© 2013 The McGraw-Hill Companies, Inc.
Since less cash is paid each period than the effective interest, the unpaid difference increases the outstanding balance of the debt.
14 - 3
© 2013 The McGraw-Hill Companies, Inc.
14 - 4
© 2013 The McGraw-Hill Companies, Inc.
14 - 5
© 2013 The McGraw-Hill Companies, Inc.
On January 1, 2012, 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 [an unrealistically short maturity to shorten the illustration]. The entire bond issue was sold in a private placement to United Intergroup, at principal amount
At the First Interest Date (June 30)
14 - 11
© 2013 The McGraw-Hill Companies, Inc.
The “unpaid” portion of the effective interest ($4,644) increases the outstanding balance to $671,297 and
666,633
× (14% ÷ 2) = $46,664
Outstanding Balance
Effective Rate
Effective Interest
The bond indenture calls for semiannual interest payments of
only $42,000 – the stated rate (6%) times the principal value of $700,000. The difference ($4,664) increases the liability and is
– The financial liability contains an embedded derivative and the issuer is permitted to measure, the hybrid instrument comprising the host and embedded derivative, at fair value.
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:
. . . Resulting from past transactions or events.
v Some liabilities are not contractual obligations and may not be payable in cash.
Notice that the definition of a liability involves the present, the future, and the past. It is a present responsibility, to transfer assets or services in the future, caused by a transaction or other event that already has happened.
14 - 20
© 2013 The McGraw-Hill Companies, Inc.
• Financial liabilities that are held-for-trading must be measured at fair value at the end of each reporting period.
– An accounting mismatch exists between financial assets and financial liabilities.
– Management of financial assets and liabilities requires the use of fair value information.
CH 14
Bonds and Long-Term Notes
14 - 1
Probable future transfer of economic benefits . . .
. . . Arising from present obligations to other entities . . .
14 - 13
7% × $666,633 $46,664 – 42,000
6% × $700,000
$666,633 + 4,664
© 2013 The McGraw-Hill Companies, Inc.
$48,544 is rounded to cause outstanding balance to be exactly $700,000 on 12/31/14.
© 2013 The McGraw-Hill Companies, Inc.
14 - 16
© 2013 The McGraw-Hill Companies, Inc.
14 - 17
© 2013 The McGraw-Hill Companies, Inc.
14 - 18
© 2013 The McGraw-Hill Companies, Inc.
14 - 19
© 2013 The McGraw-Hill Companies, Inc.
Determining interest by allocating the discount (or premium) on a straight-line
basis is NOT permitted under IFRS, although it is allowed under U.S. GAAP
14 - 14
© 2013 The McGraw-Hill Companies, Inc.
principal
14 - 15
In some countries, these bonds are attractive to investors as tax is not paid on the zero cash coupons!
(i.e. at par).
At Issuance (January 1)
14 - 6
© 2013 The McGraw-Hill Companies, Inc.
14 - 7
© 2013 The McGraw-Hill C12, 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%.
reflected as a reduction in the discount (a valuation account).
14 - 10
© 2013 The McGraw-Hill Companies, Inc.
The effective interest is calculated each period as the effective interest rate times the amount of the debt outstanding during the interest period.
The entire bond issue was purchased by United Intergroup.
Present value of an ordinary annuity of $1: n=6, i=7%
present value of $1: n=6, i=7%
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.
14 - 8
© 2013 The McGraw-Hill Companies, Inc.
14 - 9
© 2013 The McGraw-Hill Companies, Inc.
Interest accrues on an outstanding debt at a constant percentage of the debt each period. Interest each period is recorded as the effective interest rate multiplied by the outstanding balance of the
• A company is not required to, but has the option to measure, non-trading financial assets and liabilities, including bonds and notes, at fair value if any of the following conditions exist.
14 - 2
© 2013 The McGraw-Hill Companies, Inc.
Creditors’ interests in a company’s assets. Obligation for future payments at specified (or
estimated) amounts, at specified (or projected) dates. Interest accrues on debt over time. Periodic interest is the effective interest rate times the amount of the debt outstanding during the interest period. Debt is reported at the present value of principal and/or interest payments, discounted at the effective rate of interest at issuance.
reduces the discount to $28,703 on June 30.
14 - 12
© 2013 The McGraw-Hill Companies, Inc.
Since less cash is paid each period than the effective interest, the unpaid difference increases the outstanding balance of the debt.
14 - 3
© 2013 The McGraw-Hill Companies, Inc.
14 - 4
© 2013 The McGraw-Hill Companies, Inc.
14 - 5
© 2013 The McGraw-Hill Companies, Inc.
On January 1, 2012, 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 [an unrealistically short maturity to shorten the illustration]. The entire bond issue was sold in a private placement to United Intergroup, at principal amount
At the First Interest Date (June 30)
14 - 11
© 2013 The McGraw-Hill Companies, Inc.
The “unpaid” portion of the effective interest ($4,644) increases the outstanding balance to $671,297 and
666,633
× (14% ÷ 2) = $46,664
Outstanding Balance
Effective Rate
Effective Interest
The bond indenture calls for semiannual interest payments of
only $42,000 – the stated rate (6%) times the principal value of $700,000. The difference ($4,664) increases the liability and is
– The financial liability contains an embedded derivative and the issuer is permitted to measure, the hybrid instrument comprising the host and embedded derivative, at fair value.