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Intermediate Accounting

Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Chapter 14

Long-Term Liabilities - all with Video Answers

Educators


Chapter Questions

05:45

Problem 1

(a) From what sources might a corporation obtain funds through long-term debt? (b) What is a bond indenture? What does it contain? (c) What is a mortgage?

Mihir Nayar
Mihir Nayar
Numerade Educator
02:26

Problem 2

Potlatch Corporation has issued various types of bonds such as term bonds, income bonds, and debentures. Differentiate between term bonds, mortgage bonds, collateral trust bonds, debenture bonds, income bonds, callable bonds, registered bonds, bearer or coupon bonds, convertible bonds, commodity-backed bonds, and deep discount bonds.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
00:23

Problem 3

Distinguish between the following interest rates for bonds payable:
(a) yield rate
(b) nominal rate
(c) stated rate
(d) market rate
(e) effective rate

Amy Jiang
Amy Jiang
Numerade Educator
05:07

Problem 4

Distinguish between the following values relative to bonds payable:
(a) maturity value
(b) face value
(c) market value
(d) par value

Pragya Ahuja
Pragya Ahuja
Numerade Educator
03:10

Problem 5

Under what conditions of bond issuance does a discount on bonds payable arise? Under what conditions of bond issuance does a premium on bonds payable arise?

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
01:16

Problem 6

How should discount on bonds payable be reported on the financial statements? Premium on bonds payable?

Heather Duong
Heather Duong
Numerade Educator
00:50

Problem 7

What are the two methods of amortizing discount and premium on bonds payable? Explain each.

Sam Limsuwannarot
Sam Limsuwannarot
Numerade Educator
04:29

Problem 8

Zopf Company sells its bonds at a premium and applies the effective-interest method in amortizing the premium. Will the annual interest expense increase or decrease over the life of the bonds? Explain.

Mihir Nayar
Mihir Nayar
Numerade Educator
04:54

Problem 9

Briggs and Stratton recently reported unamortized debt issue costs of $\$ 5.1$ million. How should the costs of issuing these bonds be accounted for and classified in the financial statements?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
01:08

Problem 10

Will the amortization of Discount on Bonds Payable increase or decrease Bond Interest Expense? Explain.

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
01:21

Problem 11

What is the "call" feature of a bond issue? How does the call feature affect the amortization of bond premium or discount?

Tommy Nguyen
Tommy Nguyen
Numerade Educator
03:08

Problem 12

Why would a company wish to reduce its bond indebtedness before its bonds reach maturity? Indicate how this can be done and the correct accounting treatment for such a transaction.

Rashmi Sinha
Rashmi Sinha
Numerade Educator
01:55

Problem 13

How are gains and losses from extinguishment of a debt classified in the income statement? What disclosures are required of such transactions?

Jennifer Stoner
Jennifer Stoner
Numerade Educator
02:51

Problem 14

What is done to record properly a transaction involving the issuance of a non-interest-bearing long-term note in exchange for property?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
00:23

Problem 15

How is the present value of a non-interest-bearing note computed?

Amy Jiang
Amy Jiang
Numerade Educator
00:23

Problem 16

When is the stated interest rate of a debt instrument presumed to be fair?

Amy Jiang
Amy Jiang
Numerade Educator
01:29

Problem 17

What are the considerations in imputing an appropriate interest rate?

Haricharan Gupta
Haricharan Gupta
Numerade Educator
00:23

Problem 18

Differentiate between a fixed-rate mortgage and a variable-rate mortgage.

Amy Jiang
Amy Jiang
Numerade Educator
01:10

Problem 19

What disclosures are required relative to long-term debt and sinking fund requirements?

Nick Johnson
Nick Johnson
Numerade Educator
01:02

Problem 20

What is off-balance-sheet financing? Why might a company be interested in using off-balance-sheet financing?

Nick Johnson
Nick Johnson
Numerade Educator
00:40

Problem 21

Explain how a non-consolidated subsidiary can be a form of off-balance-sheet financing.

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
00:40

Problem 22

Explain how a non-consolidated subsidiary can be a form of off-balance-sheet financing.

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
01:06

Problem 23

Where can authoritative iGAAP guidance related to liabilities be found?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:35

Problem 24

Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP with respect to the accounting for liabilities.

Ameer Said
Ameer Said
Numerade Educator
04:53

Problem 25

Hong Kong Trading Co. (which uses iGAAP) is in the midst of a multi-year operational restructuring. It reported the following information in its 2010 annual report (amounts in $\$,$ in millions): Restructuring provision balance at 1 January $2010, \$ 135 ;$ provisions made in the period, $\$ 275 ;$ and unused amounts reversed, $\$ 22 .$ Respond to the following: (a) What is the balance for the Restructuring Provision at 31 December $2010 ?$ (b) How did the reversal of unused amounts affect net income? (c) Briefly discuss how the accounting for the restructuring provision can be used for earnings management.

Amit Srivastava
Amit Srivastava
Numerade Educator
02:10

Problem 26

Briefly discuss how accounting convergence efforts addressing liabilities are related to the IASB/FASB conceptual framework project.

Jennifer Stoner
Jennifer Stoner
Numerade Educator
03:41

Problem 27

What are the types of situations that result in troubled debt?

Pragya Ahuja
Pragya Ahuja
Numerade Educator
02:11

Problem 28

What are the general rules for measuring gain or loss by both creditor and debtor in a troubled-debt restructuring involving a settlement?

Sujita Thavva
Sujita Thavva
Numerade Educator
04:11

Problem 29

(a) In a troubled-debt situation, why might the creditor grant concessions to the debtor?
(b) What type of concessions might a creditor grant the debtor in a troubled-debt situation?

Mihir Nayar
Mihir Nayar
Numerade Educator
02:11

Problem 30

What are the general rules for measuring and recognizing gain or loss by both the debtor and the creditor in a troubled-debt restructuring involving a modification of terms?

Sujita Thavva
Sujita Thavva
Numerade Educator
01:43

Problem 31

What is meant by "accounting symmetry" between the entries recorded by the debtor and creditor in a troubled-debt restructuring involving a modification of terms? In what ways is the accounting for troubled-debt restructurings non-symmetrical?

Jennifer Stoner
Jennifer Stoner
Numerade Educator
01:22

Problem 32

Under what circumstances would a transaction be recorded as a troubled-debt restructuring by only one of the two parties to the transaction?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator