上海海事外国会计选读课件chapter5.pptVIP

Bonds (debt)—Interest payments to bondholders are an expense that reduces taxable income. Stock (equity)—Dividend payments are made from after tax net income and retained earnings. Earnings per share on common stock can often be increased by issuing bonds rather than additional stock. Earnings per share $ 1.20 $ 1.50 $ 2.46 Earnings per share $ 0.66 $ 0.42 $ 0.30 A bond contract is called a bond indenture 债券契约or trust indenture信托契约. Long-term debt—repayable 10, 20, or 30 years after date of issuance. Issued in face (principal) amounts of $1,000, or multiples of $1,000. Contract interest rate (coupon rate) 票面利息 is fixed for term (life) of the bond. Face amount 面值of bond repayable at maturity date. The price of bonds are quoted as a percentage of the bonds’ face value. The Present-Value Concept and Bonds Payable Present Value The price that buyers are willing to pay Time value of money The amount of cash to be received today is worth more than the same amount of cash to be received in the future The Present-Value Concept and Bonds Payable Accounting for Bonds Payable Bond Redemption Balance sheet presentation of bonds payable Bonds payable are reported as long-term liabilities. Separate accounts are normally maintained for each bond issue When the balance sheet date is within one year of the maturity date of the bonds, the bonds may be classified as a current liability. Discount on bonds payable account is reported as a deduction from the bonds payable; premium on bonds payable account is reported as addition to the related bonds payable. A description of the bonds and other relevant information should be disclosed. On January 1, 2005, Issue 5-year, $100,000 zero-coupon bonds when the market rate of interest is 13%. Jan. 1 Cash 53 273 00 Discount on Bonds Payable 46 727 00 Issued $100,000 zero-coupon bonds. Bonds Payable 100 000 00 2005 Accounting for Bonds Payable Zero-Coupon Bonds The bond matured on December 31, 2009. At this time, the corporation pa