# FAR 5 Review 3 B

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1. The market price of a bond issued at a premium is equal to the present value of its principal amount and the presnet value of all ---------------------------------- at the market (effective) interest rate.
future interest payments
2. The market price of a bond issued at a premium is equal to the present value of its principal amount and the presnet value of all future interest payments at the ------------------------------ rate.
market (effective) interest
3. The market price of a bond issued at a premium is equal to the ----------- of its principal amount and the presnet value of all future interest payments at the market (effective) interest rate.
present value
4. To determine the --------------------- of a bond the present value of the principal is added tot he present value of all interest payments using the market interest rate
market price
5. To determine the market price of a bond the ------------------------- of the principal is added to the present value of all interest payments using the market interest rate
present value
6. To determine the market price of a bond the present value of the principal is added tot he -------------------------- of all interest payments using the market interest rate
present value
7. To determine the market price of a bond the present value of the principal is added tot he present value of all --------------------- using the market interest rate
interest payments
8. On the issueance date, bonds are reported at the -------------------------------
issueance price
9. What is the Book Value Method
Under the book value method of accounting for converiable bonds no gain or loss is recongnized on the conversion.  Instead the bond payable and related premium or discount is written off and common stock is credited (at par) Additional paid in capital is credited for the excess of the bonds carrying value over the stocks par value less any conversion costs.
10. Under the ---------------------------- of accounting for converiable bonds no gain or loss is recongnized on the conversion.  Instead the bond payable and related premium or discount is written off and common stock is credited (at par) Additional paid in capital is credited for the excess of the bonds carrying value over the stocks par value less any conversion costs.
book value method
11. Under the -------------------------- of exchanging converible bonds for stock the ------------------------ of the bonds is reallocated tothe par value and the additional paid in capital accounts of the common stock.  Thus stock holders equity is increased.
book value method,  book value
12. Under the book value method of exchanging converible bonds for stock the book value of the bonds is reallocated tothe par value and the additional paid in capital accounts of the common stock.  Thus -------------------------- is increased.
stockholders equity
13. Under the book value method of exchanging converible bonds for stock the book value of the bonds is reallocated tothe par value and the additional paid in capital accounts of the common stock.  Thus stock holders equity is -------------------.
increased
14. --------------------- equity is increased by the value of the warrents of a bond
stock holders

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 Author: Joens1313 ID: 223835 Filename: FAR 5 Review 3 B Updated: 2013-06-14 16:06:47 Tags: FAr Review Folders: Description: FAR 5 Review 3 B Show Answers:

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