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PREVIEW OF CHAPTER 14 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 14-2 14 Non-Current Liabilities LLEAEARRNNIINNGG OOBBJJECECTTIIVEVESS After studying this chapter, you should be able to: 1. Describe the formal procedures 5. Explain the accounting for long-term associated with issuing long- notes payable. term debt. 6. Describe the accounting for the 2. Identify various types of bond issues. extinguishment of non-current liabilities. 3. Describe the accounting valuation for 7. Describe the accounting for the fair bonds at date of issuance. value option. 4. Apply the methods of bond discount 8. Explain the reporting of off-balance- and premium amortization. sheet financing arrangements. 9. Indicate how to present and analyze non-current liabilities. 14-3 BONDS PAYABLE Non-current liabilities (long-term debt) consist of an expected outflow of resources arising from present obligations that are not payable within a year or the operating cycle of the company, whichever is longer. Examples: ► Bonds payable ► Pension liabilities ► Long-term notes payable ► Lease liabilities ► Mortgages payable Long-term debt has various covenants or restrictions. 14-4 LO 1 Issuing Bonds Bond contract known as a bond indenture. Represents a promise to pay: (1) sum of money at designated maturity date, plus (2) periodic interest at a specified rate on the maturity amount (face value). Paper certificate, typically a €1,000 face value. Interest payments usually made semiannually. Used when the amount of capital needed is too large for one lender to supply. 14-5 LO 1 14 Non-Current Liabilities LLEAEARRNNIINNGG OOBBJJECECTTIIVEVESS After studying this chapter, you should be able to: 1. Describe the formal procedures 5. Explain the accounting for long-term associated with issuing long-term debt. notes payable. 2. Identify various types of bond 6. Describe the accounting for the issues. extinguishment of non-current liabilities. 3. Describe the accounting valuation for 7. Describe the accounting for the fair bonds at date of issuance. value option. 4. Apply the methods of bond discount 8. Explain the reporting of off-balance- and premium amortization. sheet financing arrangements. 9. Indicate how to present and analyze non-current liabilities. 14-6
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