Accounting Mod8

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Author:
ryanpoz
ID:
134322
Filename:
Accounting Mod8
Updated:
2012-04-09 02:34:16
Tags:
Accounting Mod8 Bonds
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Description:
Bonds, Long term liabilites
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  1. Discount
    The discount that results when the selling price of bonds is less than the face value of the bonds.

    Occurs when the market interest rate is GREATER than contractual interest rate.
  2. Capital Lease
    all benefits and risks of ownership are on lessee, effectively results in purchase of property.
  3. Contractual interest rate
    rate that determines the amount of interest paid by borrower and received by lender
  4. Convertible bonds
    bonds that can be converted into shares
  5. Debenture bonds
    unsecured bonds, issued against general credit of borrower
  6. Debt to Total Assets
    Total Liabilities / Total Assets
  7. EBIT
    Earnings before Interest and Tax

    Net Income + Interest Expense + Income Tax Expense
  8. Effective Interest Method of Amortization
    A method of amortizing a bond discount or bond premium that results in periodic interest expense equal to a constant % of the carrying value of the bond.
  9. Interest Coverage Ratio
    ability of a company to meet interest obligations.

    EBIT/interst expense
  10. Market (effective) rate of interest
    rate that investors require for lending money to a corporation
  11. Off-balance sheet financing
    the intentional effort by a company to structure its financing arrangements so as to avoid showing liabilities on its books
  12. Operating Lease
    lessee has tempory use of property, lessor still retains all ownership risks and rewards
  13. Premium (bonds payable)
    difference that results when the selling price of th ebonds is greater than the face value of the bonds.

    Occurs when the market interest rate is LESS than the contractual interest rate.
  14. Present Value
    value today of an amount to be received at some date in the future after taking interest rates into account
  15. Redeemable bonds (callable bonds)
    issuer can redeem at stated dollar amount before maturity date
  16. retractable bonds
    bondholder can redeem at a stated dollar amount before maturity
  17. serial bonds
    mature in installments
  18. Term Bonds
    mature at a single specific future date

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