Long-term debt: A debt payable by the company for more than a period of 12 months or 1 year is termed as long-term debt. It is a form of company’s loan and other liabilities. Every company must disclose long-term debts on their
(a)
To discuss: To discuss the sources of long-term debt.

Explanation of Solution
Justification: The corporation acquires or raises funds through long-term debt from different sources, like:
- Issuance of bonds.
- Mortgages.
- Bonds.
- Long-term notes.
Thus, the sources from where a corporation acquires funds by means of long-term debts are listed in the solution.
(b)
To discuss: To discuss the meaning of bond indenture and elements contained in the bond indenture.

Explanation of Solution
Justification: Bond’s indenture is a legally enforceable contract between the bond issuer and bondholder. The issuer of bonds signs this form of agreement. This contract enforces obligations that must be performed by the bond issuer to the bondholder.
Bond indenture contains certain restrictive covenants mainly for the protection of the bondholders. It includes restriction on the payment of dividend, restriction on future borrowings, and restriction on behalf of maintaining the minimum level of
Thus, the given terms are explained.
(c)
To discuss: To discuss the meaning of mortgages.

Explanation of Solution
Justification: Mortgages are important debt instrument of a company. A mortgage is a document that is stated on the security of a loan. It even clearly specifies the rights of the mortgagee under default of repayment of the debt or loan. As a result, the borrower is obliged to repay with the set of predetermined payments.
Thus, the given terms are explained.
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Chapter 14 Solutions
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