Bài giảng Financial Accounting - Chapter 9: Long-Term Liabilities

Long-Term LiabilitiesChapter 9 Learning ObjectivesExplain financing alternativesIdentify the characteristics of bondsDetermine the price of a bond issueAccount for the issuance of bondsRecord the retirement of bondsIdentify other major long-term liabilitiesMake financial decisions using long-term liability ratiosPart AOverview of Long-Term DebtLearning Objective 1Explain financing alternatives9-4Financing AlternativesCapital structure: mixture of liabilities and stockholders’ equity a business usesDebt financing: borrowing moneyEquity financing: obtaining additional investment from stockholdersLearning Objective 2Identify the characteristics of bonds9-6What Are Bonds?Formal debt instrumentUsually issued to many lendersBorrower repays the principal or face amount, at a specified maturity datePay interest over the life of the bondPrivate placement: selling debt securities directly to a single investorCharacteristics of BondsSecured bondsUnsecured bondsTerm bondsSerial bondsCallable bondsConvertible bondsIllustration 9.1—Summary of BondCharacteristics9-9Part BPricing a BondLearning Objective 3Determine the price of a bond issue9-11Illustration 9.12—Stated Rate, Market Rate, and the Bond Issue Price9-12Part CRecording Bonds PayableLearning Objective 4Account for the issuance of bonds9-14Recording Bonds Payable—Issued at Face ValueBonds issue for exactly $100,000, assuming a 7% market interest rateFirst semiannual interest payment:Recording Bonds Payable—Issued at Discount9-16Recording Bonds Payable—Issued at Premium9-17Illustration 9.15—Changes in Carrying Value over Time9-18Learning Objective 5Record the retirement of bonds9-19Recording Bond Retirements—At MaturityRetired: buy back of bonds from the investorsRecording Bond Retirements—Before MaturityEarly extinguishment of debt: retirement of debt before its scheduled maturityPart DOther Long-Term LiabilitiesLearning Objective 6Identify other major long-term liabilities9-23Installment NotesRequires installment paymentsInstallment payment: payment includes interest and outstanding balanceLeasesContractual arrangement between lessor (owner) and lessee (user) to provide the right to use an asset for a specified period of timeTypes:Operating leases: lessor owns the asset, and the lessee simply uses the asset temporarilyCapital leases: lessee buys an asset and borrows the money through a lease to pay for the assetLearning Objective 7Make financial decisions using long-term liability ratios9-26Debt AnalysisBusiness decisions include riskFailure to properly consider risk could prove costlyLong-term debt management is crucialMeasuring a company’s risk:Debt to equity ratioTimes interest earned ratioDebt to Equity RatioMeasure of financial leverageTimes Interest Earned RatioCompares interest expense with income available to pay those chargesEnd of Chapter 99-30