:A dicount on bonds payable .Occurs when a corporation issues bonds with a stated rate more than the market rate A .Occurs when a corporation issues bonds with a stated rate less than the market rate.B O .Is reported under the equity section on the balance sheet.C O .Is a contra-asset account.D

:A dicount on bonds payable .Occurs when a corporation issues bonds with a stated rate more than the market rate A .Occurs when a corporation issues bonds with a stated rate less than the market rate.B O .Is reported under the equity section on the balance sheet.C O .Is a contra-asset account.D

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 13MC: The cash interest payment a corporation makes to its bondholders is based on ________. A. the market...

See similar textbooks

Related questions

Q: A corporation recognizes a gain or loss O only when bonds are converted into common stock. when…

A: Redemption of Bond: When interest rates fall dramatically, bond issuers are forced to redeem their…

Q: The sale of bonds is also referred a. Equity Finance b. Private Finance c. Debt Finance d.…

A: A firm can raise finance in two ways. They are referred to as debt finance and equity finance.

Q: Which of the following are differences between a bond and a common stock? (Select all that…

A: Debt markets are markets where you contribute within the institutions or trade substances by the…

Q: Under the incremental method the proceeds from the sale of debt with detachable stock warrants…

A: when the detachable stock warrant are attached to the debt the proceed from sales should be…

Q: Premium on Bonds Payable is a(n) a. valuation account b. contra account c. accumulation account d.…

A: Premium on bonds payable : Premium on bonds payable arises when bonds payable are issued for an…

Q: Bonds for which the owners' names are not registered with the ISSUING corporation are called Select…

A: Bearer Bond: A bearer bond is a fixed-income asset in which the holder, or bearer, owns the security…

Q: What is the difference between financing a corporation with debt vs equity Provide an example of…

A: There are different sources of finance that a corporation can use for its business purpose when it…

Q: 5. A gain or loss may arise from which of the following? a. The initial recognition of the debt and…

A: Following is the answer to the given question

Q: 5. A gain or loss may arise from which of the following? a. The initial recognition of the debt and…

A: Liabilities are the obligation of the business towards third parties, or two internal employees, or…

Q: Gains on the redemption of bonds are reported in the Other Revenue section of the income statement.…

A: Introduction: Income statement is considered as one of the key financial statements that shows a…

Q: The largest type of municple bonds outstanding is: A. revenue bonds. B. Industrial development…

A: Municipal Bonds:Municipal bonds are those bonds which are issued by local or state government of a…

Q: These are certificates that promise to pay a fixed rate of interest by a corporation or government…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: debt instrument

A: A Bond is considered as DEBT INSTRUMENT

Q: When a company redeems bonds at a premium to carrying value, that activity is usually classified as:…

A: The company issued the bonds to raise funds in the company so that that funds can be utilized in the…

Q: Distinguish the following financial markets. Provide examples of the type and/or nature of the…

A: Debt market is the market where loans are bought and sold. It is also called the bond market. Equity…

Q: For a corporation, what are theadvantages of corporate bondsover long-term loans?

A: Bonds are a type of debt which is issued by the company or the government. It is long term debt on…

Q: True (t) or False (f) _____ The board of directors may authorize more bonds than are issued

A: SOLUTIONS- BONDS- IT IS A FIXED INCOME INSTRUMENT THAT REPRESENT THE LOAN MADE BY AN INVESTOR TO A…

Q: The proceeds from a bond issued with detachable share warrants should be accounted for A. entirely…

A: Bonds are known as a cheaper source of finance because their interest is a tax-saving item. share…

Q: Given that a bond's carrying value is $185,000 and the fair value is $183,000, what is the journal…

A: Bonds are priced by discounting future cash flows. Future cash flows include coupons and par value…

Q: GAAP requires investments in bonds classified as trading securities to be reported at their:

Q: The sale of bonds is also referred as: a. Public Finance b. Debt Finance c. Equity Finance d.…

A: The Bonds is a type of a loan. When a company, Government or muncipal corporation is in need of…

Q: Identify the following as either an advantage (A) or a disadvantage (D) of bond financing for a…

A: Bonds payable: Bonds payable are referred to long-term debts of the business, issued to various…

Q: Equity instruments include all of the following, except * A. Preference shares B. Corporate bonds…

A: There are two types of instruments which can be issued by an organisation to raise the fund. These…

Q: Corporate bonds that can be exchanged for shares of the corporation’s common stock ifcertain…

A: Corporate bond: It can be defined as a debt security, usually issued by the public or private…

Q: Bond Valuation Theory Question 2 Securities issued by Corporations are classified as either debt or…

A: Introduction: Debt: Borrowing money for running the company called as Debt. Debt is a liability to…

Q: Which of the following are the "big-three" issuers of Bonds? OA. US Treasuries O B. Municipalities…

A: The issuers of bonds are the companies or organizations that issue the bond. The big issuers are…

Q: When bonds and other debt securities are issued, payments such as legal costs, printing costs, and…

A: The correct answer is Option (d).

Q: unamortized premium

A: Any unamortized premium should be reported on the balance sheet of the issuing corporation as Answer…

Q: The journal entry a company makes for the payment of interest, interest expense, and amortization of…

A: Journal entries are passed following the golden rules of accounting. Debit all assets and expenses…

Q: capital marke

A: common stock and corporate bonds are traded in capital market. capital market is a place where…

Q: A corporate bond is a long-term debt instrument indicating that a corporation has borrowed a certain…

A: Long-term debt refers to debt obligations with a maturity of more than one year. Long-term debt is a…

Q: When the conversion of bonds payable to common stock is recorded under the market value method and…

A: Journal entry will be - bonds payable debit…

Q: Investments in debt securities are classified into the following categories according to…

A: Investment in debt securities: Purchase of debt securities of another corporation.

Q: Which type of bond has interest payments that are exempt from federal income taxes? A. Corporate…

A: A bond is a fixed income instrument. The bond holders are referred to as the debt-holders or…

Q: (I) Capital market securities fall into two categories: bonds and stocks. (II) Long-term bonds…

A: Capital market is a place where buyers and sellers of financial securities trade with each other.…

Q: Which of the following is not a primary source of corporate debt financing? a. Bonds. b. Notes. c.…

Q: Describe the three methods used to ensure that funds are available to redeem corporate bonds at…

A: The three methods used to ensure that funds are available to redeem corporate bonds at maturity…

Q: Puttable bonds are the bonds which are redeemed only on the liquidation of the company. T/F?

A: Liquidation refers to selling of any owned assets for generating cash but when it comes to a…

Q: Which of the following is a difference between stocks and bonds? A. Bonds may be issued by…

A: Bonds are the debt and when entities issue bonds then, they are required to pay interest on it.

Q: T or F - Zero-interest bonds sell at a significant discount that provides an investor with a total…

A: Zero coupon bonds means those bonds which were issued for money or any assets but for which no…

Q: (a) From what sources might a corporation obtain fundsthrough long-term debt? (b) What is a bond…

A: (a)A corporation might obtain funds through long-term debt through the following sources: 1. Bonds…

Q: Describe corporate bonds and explain the taxadvantage of debt financing.

A: A corporate bond is a financial instrument issued by a corporation in order to raise funds for the…

Question

:A dicount on bonds payable
.Occurs when a corporation issues bonds with a stated rate more than the market rate A O
.Occurs when a corporation issues bonds with a stated rate less than the market rate .B O
.Is reported under the equity section on the balance sheet.C
.Is a contra-asset account.D

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The cash interest payment a corporation makes to its bondholders is based on ________. A. the market rate times the carrying value B. the stated rate times the principal C. the stated rate times the carrying value D. the market rate times the principal
One way for a corporation to accomplish long-term financing is through the issuance of long-term debt instruments in the form of bonds. Required: 1. Explain how to account for the proceeds from bonds issued with detachable stock purchase warrants. 2. Contrast a serial bond with a term (straight) bond. 3. For a 5-year term bond issued at a premium, why is the amortization in the first year of the life of the bond different using the interest method of amortization as opposed to the straight-line method? Include in your discussion whether the amount of amortization in the first year of the life of the bond is higher or lower using the interest method as opposed to the straight-line method. 4. When a company sells a bond issue between interest dates at a discount, what journal entry does it make, and how is the subsequent amortization of bond discount affected? Include in your discussion an explanation of how the amounts of each debit and credit are determined. 5. Explain how to account for and classify the gain or loss from the reacquisition of a long-term bond prior to its maturity.
Stockholders equity consists of which of the following? A. bonds payable B. retained earnings and accounts receivable C. retained earnings and paid-in capital D. discounts and premiums on bond payable
Which of the following is not a valid statement regarding bonds payable? a. Bonds issued by an entity represent a financial liability and shall be measured at amortized cost using the effective interest method. b. The market price of a bond issue is the present value of its principal amount plus the present value of all future interest payments, both discounted at the market rate of interest when the bonds were issued. c. Bonds that mature at a single date are called term bonds. d. The amortization of a bond premium increases both the recorded interest expense and amortized cost.
Which of the following are differences between a bond and a common stock? (Select all that apply.) A. A corporation has to pay all bondholders before paying stockholders. B. A bond is a claim on the earnings and assets of a corporation, whereas a common stock promises to make periodic payments for a specified period of time. C. A corporation has to pay all stockholders before paying bondholders. D. A bond is a debt instrument that entitles the owner to receive periodic amounts of money until its maturity date, whereas a common stock represents a share of ownership of the institution that has issued the stock.
Bonds that are issued on the general creditworthiness of the company are: Bonds that are issued on the general creditworthiness of the company are: 1. callable bonds 2. convertible bonds 3. secured bonds 4. debenture or unsecured bonds
Which of the following is correct? A. Bonds maturing at a specified single date are called ordinary bonds. B. Equity securities and debt securities differ only in their effect on a company’s cash flow. C. One purpose in holding bonds as a long-term investment is to provide the investor a voting voice in the management of the issuing company. C. On bonds, the yield rate and the nominal rate of interest are always different.
When bonds and other debt securities are issued, payments such as legal costs, printing costs, and underwriting fees, are referred to as debt issuance costs (called transaction costs under IFRS). If Rushing International prepares its financial statements using IFRS: a. the recorded amount of the debt is increased by the transaction costs. b. the decrease in the effective interest rate caused by the transaction costs is reflected in the interest expense. c. the transaction costs are recorded separately as an asset. d. the increase in the effective interest rate caused by the transaction costs is reflected in the interest expense.
1. Which of the following statements regarding bonds payable is true? a.The entire principal amount of most bonds matures on a single date. b.When an issuing company's bonds are traded in the secondary market, the company will receive part of the proceeds when the bonds are sold from the first purchaser to the second purchaser. c.A debenture bond is backed by specific assets of the issuing company. d.Generally, bonds are issued in denominations of $100.
When the effective cost of debt is greater its the nominal cost, *a. The entity records a discount on the bond payable.b. the initial net measurement of the bond is more than the face value.c. The net proceeds is more than the face value.d. The interest expense is less than the interest payments.
When the conversion of bonds payable to common stock is recorded under the market value method and the market value of the common stock exceeds the book value of the bonds at date of conversion, the difference is recorded as a debit to Loss on Conversion. debit to Additional Paid-in Capital−Common Stock. debit to Discount on Bonds Payable. debit to Retained Earnings.
Which of the following statements about the characteristics of debt and equity is true? a. All of the statements are true b. They can both be long-term financial instruments. c. They both involve a claim on the issuer's income. d. They both enable a corporation to raise funds.