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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What is a call provision? Why do companies often include call provisions on bond issues?

To determine

State the meaning of call provision and explain the reason for which the companies include call provisions on issuance of bonds.

Explanation

Call provision:

Call provision is a clause or condition on bonds that allows the issuer of debt to recall the bonds and redeem or retire those bonds before the maturity date at a pre-stated percentage of the face value as mentioned in the bond indenture...

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