T or F -Under generally accepted accounting principles, gain or loss must be recognized on the conversion of bonds into equity securities. -A discount on bond payable is charged to interest expense using the effective interest method.

T or F -Under generally accepted accounting principles, gain or loss must be recognized on the conversion of bonds into equity securities. -A discount on bond payable is charged to interest expense using the effective interest method.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 9GI

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T or F

-Under generally accepted accounting principles, gain or loss must be recognized on the conversion of bonds into equity securities.

-A discount on bond payable is charged to interest expense using the effective interest method.

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Similar questions

What best describes the discount on bonds payable account? A liability An asset A contra liability An expense
The premium on bonds payable account is shown on the balance sheet as A contra asset. A reduction of an expense. An addition to a long-term liability. A subtraction from a long-term liability.
The Discount on Bonds Payable accounta. is an expense account.b. is a contra account to Bonds Payable.c. is expensed at the bond’s maturity.d. is a miscellaneous revenue account.
In the balance sheet, the account, Premium on Bonds Payable, is: OA. classified as a liability account. B. deducted from bonds payable. C. added to bonds payable. OD. A and C
Which of the following is not a valid statement regarding bonds payable? a. Bonds issued by an entity represent a financial liability and shall be measured at amortized cost using the effective interest method. b. The market price of a bond issue is the present value of its principal amount plus the present value of all future interest payments, both discounted at the market rate of interest when the bonds were issued. c. Bonds that mature at a single date are called term bonds. d. The amortization of a bond premium increases both the recorded interest expense and amortized cost.
Bonds which are collateralized by specific assets in the event the borrowing company defaults on bond payments are called: Select one: a. serial bonds. b. callable bonds. c. unsecured bonds. d. secured bonds. e. convertible bonds.
Any unamortized premium should be reported on the balance sheet of the issuing corporation as a. paid-in capital b. a direct deduction from the face amount of the bonds in the Liabilities section c. an addition to the face amount of the bonds in the Liabilities section d. a direct deduction from retained earnings
Please show the solutions from current/non-current liability to balances of carrying of bonds payable.
The balance in Unamortized Premium on Bonds Payable should be O a. reported separately in the Current Liabilities section of the talance sheet. O b. 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.
What type of account is Discount on Bonds Payable? What is its normal balance? Is it added to or subtracted from the Bonds Payable account to determine the carrying amount?
Under IFRS, bond issuance costs, including the printing costs and legal fees associated with the issuance, should be:(a) expensed in the period when the debt is issued.(b) recorded as a reduction in the carrying value of bonds payable.(c) accumulated in a deferred charge account and amortized over the life of the bonds.(d) reported as an expense in the period the bonds mature or are redeemed.
2. Bond issue costs, such as printing fees, legal fees, commissions, etc. are most appropriately accounted for by: a. charging them to an expense account in the year the bonds are actually sold. b. debiting them to unamortized bond issue costs, setting them as a deferred charge on the statement of financial position, and amortizing them in a manner similar to bond discount over the life of the bond. c. charging them to an expense account in the year the bonds are originally dated whether or not they are sold in that year. d. considering them in the measurement of the bonds payable.