会计英语-教学课件.pptVIP

Accounting English @2017 * The Concept of Present Value $1,000 invested today at 10%. Money can grow over time, because it can earn interest. Accounting English @2017 * $1,000 invested today at 10%. In 5 years it will be worth $1,610.51. In 25 years it will be worth $10,834.71! Present Value Future Value The Concept of Present Value Accounting English @2017 * How much is a future amount worth today? Today Present Value FutureValue Interest compounding periods The Concept of Present Value Accounting English @2017 * How much is a future amount worth today? Three pieces of information must be known to solve a present value problem: The future amount. The interest rate (i). The number of periods (n) the amount will be invested. The Concept of Present Value Accounting English @2017 * The Present Value Concept and Bond Prices The selling price of the bond is determined by the market based on the time value of money. Accounting English @2017 * The Present Value Concept and Bond Prices The selling price of the bond is determined by the market based on the time value of money. = = Accounting English @2017 * Bonds entries Cash proceeds Discount on BP face - proceeds Bonds payable face Cash proceeds Bonds payable face Premium on bonds payable proceeds – face Accounting English @2017 * Straight-Line Amortizationof Bond Discount This method amortizes the bond discount by dividing it into equal amounts for each interest period. Granite Corp. would amortize the $7,500 discount over 20 periods with interest paid at $50,000. $7,500 ÷ 20 = $375 per period Accounting English @2017 * July 1 Interest Expense 50,375 Cash 50,000 Discount on Bonds Payable 375 Paid semiannual interest and amortized discount on bonds payable Straight-Line Amortizationof Bond Discount Accounting English @2017 * Granite Corp. sold a 10%, 10-year (20 periods), $1,000,000 bond issue at a price of 101 on Jan. 1. Cash 1,010,000 Bonds Payable