Sassy’s trial balance shows $200,000 face value of bonds with a discount balance of $2,000. The bonds mature in 10 years. How will the bonds be presented on the balance sheet? a. Bonds payable $198,000 (net of $2,000 discount) will be listed as a long-term liability. b. Bonds payable $200,000 will be listed as a long-term liability. A $2,000 discount on bonds payable will be listed as a contra current liability. c. Bonds payable $200,000 will be listed as a long-term liability. d. Bonds payable $200,000 will be listed as a long-term liability. A $2,000 discount on bonds payable will be listed as a current liability.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Sassy’s
a. Bonds payable $198,000 (net of $2,000 discount) will be listed as a long-term liability.
b. Bonds payable $200,000 will be listed as a long-term liability. A $2,000 discount on bonds payable will be listed as a contra current liability.
c. Bonds payable $200,000 will be listed as a long-term liability.
d. Bonds payable $200,000 will be listed as a long-term liability. A $2,000 discount on bonds payable will be listed as a current liability.
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