4. The gain or loss on theretirement of bonds prior tomaturity should be *a. recognized in income of theperiod of retirement.b. credited or debited to sharepremium account.c. amortized over the remainingterm of the bond.O d. ignored.

Gain or loss on redemption of debenture prior to its maturity is immediately recognised in profit…

Answered: 4. The gain or loss on the retirement…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. complete the amoritzation table by calculating interest expense, beginning & ending bond carrying amounts at the end of each period, please show work & formulas used.
When a company uses the the effective-interest method to amortize a bond discount amortization, the interest expense is equal to a) the market rate multiplied by the beginning-of-period carrying amount of the bonds. b) the market rate of interest multiplied by the face value of the bonds. c) the stated rate multiplied by the beginning-of-period carrying amount of the bonds. d) the stated (nominal) rate of interest multiplied by the face value of the bonds.
If the sale of bonds falls between interest dates, interest accrued since the last interest payment would be O a. added to; debited to Interest Revenue O b. subtracted from; debited to Interest Revenue O c. subtracted from; credited to Interest Revenue O d. added to; credited to Interest Revenue the sale proceeds and
2. The printing costs and accounting/legal fees associated with the issuance of bonds should: (A) Be expensed when incurred. (B) Be reported as a deduction from the face amount of the bonds payable on the balance sheet. (C) Be accumulated in a deferred charge account (unamortized asset) and amortized to expense over the life of the bonds. (D) Be recorded as an expense all in the year the bonds mature or are retired. (E) None of the above.
Classifying Liability-Related Accounts into Balance Sheet or Income StatementIndicate the proper financial statement classification (balance sheet or income statement) for each of the following liability-related accounts. Account Financial Statement a. Gain on Bond Retirement b. Discount on Bonds Payable c. Mortgage Notes Payable d. Bonds Payable e. Bond Interest Expense f. Bond Interest Payable (due next period) g. Premium on Bonds Payable h. Loss on Bond Retirement
Which of the following would NOT be included in the journal entry to show the conversion of bonds payable? ( NIE 13) A credit to gain on conversion credit to additional paid in capital debit to bond premium debit to bonds payable
The balance in Unamortized Discount on Bonds Payable should be Oa. reported separately in the Current Liabilities section of the balance sheef Ob. added to the face amount of the related bonds payable on the balance sheet. O C. reported in the Paid-In Capital section of the balance sheet. Od. reported on the balance sheet as a deduction from the face amount of the related bonds payable.
Explain the concept of accrued interest on bonds at the end of an accounting period.
ll of the following are differences between IFRS and GAAP in accounting for liabilities except: a. When a bond is issued at a discount, GAAP records the discount in a separate contra liability account. IFRS records the bond net of the discount. b. Under IFRS, bond issuance costs reduce the carrying value of the debt. Under GAAP, these costs are recorded as an asset and amortized to expense over the terms of the bond. c. GAAP, but not IFRS, uses the term “troubled-debt restructurings.” d. GAAP, but not IFRS, uses the term “provisions” for contingent liabilities which are accrued
When a bond is held with the objective of collecting principal and interest payments over the life of the bond, it should be account for using which of the following methods FV through OCI O FV through profit and loss method None of the choices O Amortized cost method
11. Under the straight-line amortization method, interest expense on a bond sold at a premium is equal to the a. interest paid plus bond premium amortizationb. interest rate times the book value of the bondsc. interest rate times the face value of the bondsd. interest paid minus bond premium amortization
The interest expense recorded on an interest payment date is increased a.by the amortization of premium on bonds payable b.only if the market rate of interest is less than the stated rate of interest on that date c.only if the bonds were sold at face value d.by the amortization of discount on bonds payable

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4. The gain or loss on the retirement of bonds prior to maturity should be * a. recognized in income of the period of retirement. b. credited or debited to share premium account. c. amortized over the remaining term of the bond. O d. ignored.