North West Company Incorporation

937 Words Jan 28th, 2018 4 Pages
It was founded in year 1783 and later merged with Hudson’s Bay in 1821. The company grew rapidly and expended into other regions even though facing tough competition and other economic barriers.

1. Long Term Debt and Current Portion of Long Term Debt

Long term Debt

Long term debt is financial/economic obligation of company lasting over years. This includes any financing or leasing liability that has a fixed interest rate and is to mature in more than one year. Unlike short term loans, long term loans are paid in full at maturity. Long term debt includes debentures, leasing, and Note payable (long term), bonds, deferred tax liability, mortgage loans and pension liabilities etc.

a) Debentures: a debenture is an unsecure bond certificate that does not hold any claims on assets of firms. In case of company liquidation debenture certificate holders becomes a general creditor without any priority of claim on the company’s assets.

b) Mortgage loans/Loans: mortgage loans are secured debt instrument issued by bank that places liens on specific physical property of borrower (company). It is a legally recognised undertaking.

c) Bond: for meeting long term requirements firms or governments issues bond certificates maturing from 5 to 30 years. Bonds are of two types, floating bonds and fixed rate bonds. The interest rate on floating bond…