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Accounting for Bonds Issued at Par
 
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This video explains how to account for bonds issued at par in the context of financial accounting. An example is provided to illustrate the necessary journal entries. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 25998 Edspira
Bond Issuance Examples
 
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Roger Philipp, CPA, CGMA, presents a basic bond issue with a face value of $1 million, term of 5 years, and stated or coupon rate of 8% in the video 11.01 - Bond Issuance Examples. He also shows the journal entries for issuance and interest payments at market rates or effective rates of 8%, then 10%, and then 6%. If the bond is issued to yield 8%, then the bond is issued at par and interest expense will equal the interest payment. If the effective interest rate is 10% then the bond is issued at a discount. Now interest expense will no longer equal the cash coupon interest paid. Roger explains how to set up the journal entry, keeping things simple for now with straight-line amortization of the bond discount. Roger continues the problem by showing in the journal entry how the issuer’s interest expense will equal the market rate of 10%. Finally, Roger walks through the journal entries for this 8% face rate bond issued at a premium with a yield of 6%. As an advanced bonus, Roger has us consider the effects of the bond interest payments on the statement of cash flows. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now, next page it says issuance of bonds example and we're going to go through this example. Face value of the bonds, million dollars. Term, five year versus what? Term versus serial bond which matures in installments. Stated interest rate 8%. That's how much cash I'm going to get. I'm going to get 8% of a million dollars or $80,000 in cash but what am I earning? That's a different question. Then it says effective or market or yield is eight in example A, ten in example B, six in example C. Notice that we're going to be doing three examples. One is going to be eight, eight which is issued at par, issued at face. We don't have to worry about the discounted premium then we'll go to a discount example, then we'll go to a premium example and then life will be beautiful for you, things will make sense.
Views: 28776 Roger CPA Review
Amortizing a Bond Premium
 
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This video explains how to account for bonds issued at a premium. An example is provided to illustrate how to calculate the bond proceeds, premium, interest expense, amortization of the bond premium, and the carrying value of the bonds. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 72427 Edspira
Discounts, Premiums and Bonds at Par (Intermediate Financial Accounting Tutorial #12)
 
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Before we moved onto valuing and reporting long term bonds I thought that I would provide a quick summary of bonds issued at a discount, premium or at par. The stated rate is also known as the coupon rate, or face rate. The market rate is also known as the effective rate and is the rate at which you can get other very similar or identical financial instruments (for example, a bond may have been issued at a 4% coupon rate, 1 year later the market rate for those bonds might have shifted to 6%). Website: http://www.notepirate.com Follow us on Facebook: https://www.facebook.com/pages/Note-Pirate/514933148520001?ref=hl Follow us on Twitter: https://twitter.com/notepirate We appreciate all of the support you guys have given us. Be apart of the mission to help us reach more students by subscribing, thumbs upping and adding the videos to your favorites! ** Notepirate is privately owned and exclusive to Notepirate.com.**
Views: 36506 Notepirate
Issuance of Bonds Journal Entry - Lesson 1
 
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In the video, 11.03 - Issuance of Bonds Journal Entry – Lesson 1, Roger Philipp, CPA, CGMA, provides a conceptual overview of everything that could be involved in a bond issuance journal entry, from the issuer’s point of view, step-by-step. - Step 1: Credit bonds that are payable for the face amount of the bonds. - Step 2: Credit any Accrued Interest Payable – the bond may have been accruing interest for some months before issuance. If there is accrued interest payable, it must be added to Cash in the next step. - Step 3: Debit Cash for any accrued interest payable plus either the present value of the lump sum and the annuity, as covered in previous lessons, OR for the issuance face percentage give in the problem, e.g. 101 or 98. Also for Step 3, bond issue costs or BIC are subtracted from Cash. - Step 4: Bond issue costs which are debited separately and which will be amortized straight-line over the period the bonds are outstanding. - Step 5: Add the plug – if a debit plug is needed, it’s a discount; if a credit plug is needed, it’s a premium. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Okay, now hopefully bonds are starting to make a little bit of sense, but let's continue on. You'll see here, journal entry at issuance, and we're talking about BIC and accrued interest. So what I'm going to do, is I'm going to give you pretty much anything and everything they ever test you on. They don't usually test this much of it, but I'm going to give it all to you, just so we're having a good time. Now, as we got through this, there are certain things that fall into our journal entry. And here's what we're going to look at. And I'm going to make it like a one, two, three, four, and then we'll go through the details. So here's what our journal entry will basically look like, we'll have a one, two, three, four, five or five. Hmm, very interesting.
Views: 22439 Roger CPA Review
Bond Issue at Discount and Premium(Straight Line) | Intermediate Accounting | CPA Exam FAR |Chp14 p3
 
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Bond valuation, bond interest expense, par value, amortization, straight line method, effective interest rate method, bond discount, bond premium, carrying value of bond, premium, discount, bond issue between interest dates, CPA exam
How to Amortize a Bond Discount
 
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This video explains how to account for bonds issued at a discount using the effective interest rate method for bond discount amortization. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 115927 Edspira
Introduction to bonds | Stocks and bonds | Finance & Capital Markets | Khan Academy
 
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What it means to buy a bond. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 550377 Khan Academy
Explanation: Bond Discounts
 
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This video will help you understand why companies issue bonds at a discount. We will not go over any calculations in this video.
Views: 4290 Accounting Videos
Bond Issue at Par | Valuation of Bonds Payable | Intermediate Accounting | CPA Exam FAR | Chp 14 p 2
 
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Bond valuation, bond interest expense, par value, amortization, straight line method, effective interest rate method, bond discount, bond premium, carrying value of bond, premium, discount, bond issue between interest dates, CPA exam
Accounting: Bonds (Part I)
 
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Copyright by Brian R. Lazarus. Check out this website: http://www.lazarusbusinesssolutions.com for other related video lectures.
Views: 37068 profblazarus
Bonds
 
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This video discusses advantages and disadvantages of bonds compared to stock. It also describes issuing at par, at a discount and at a premium. Finally it discusses the contract rate ( also known as coupon, stated, or nominal rate) vs the market rate.
Views: 6937 mattfisher64
Bonds | Intermediate Accounting | CPA Exam FAR | Chp 14 p 1
 
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Long-term debt consists of probable future sacrifices of economic benefits arising from present obligations that are not payable within a year or the operating cycle of the company, whichever is longer. Bonds payable, long-term notes payable, mortgages payable, pension liabilities, and lease liabilities are examples of long-term liabilities. A corporation, per its bylaws, usually requires approval by the board of directors and the stockholders before bonds or notes can be issued. The same holds true for other types of long-term debt arrangements. Generally, long-term debt has various covenants or restrictions that protect both lenders and borrowers. The indenture or agreement often includes the amounts authorized to be issued, interest rate, due date(s), call provisions, property pledged as security, sinking fund requirements, working capital and dividend restrictions, and limitations concerning the assumption of additional debt. Companies should describe these features in the body of the financial statements or the notes if important for a complete understanding of the financial position and the results of operations.
Bonds Effective Interest Method - Discount
 
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This video explains how to calculate a bond that sells at a discount. It shows the corresponding journal entries on the original sale and interest payments. It also shows how to prepare the amortization table and explains what the numbers represent.
Views: 29405 mattfisher64
Bonds Straight Line Amortization
 
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This video shows how we use the straight line amortization method to record interest expense for both a discount and a premium.
Views: 32280 mattfisher64
Types of Bonds
 
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This video discusses the various types of bonds issued by firms and other organizations. It provides examples and explains the meaning of various bond characteristics, such as call features, convertibility, securitization, etc. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 77653 Edspira
Bonds & Bond Valuation | Introduction to Corporate Finance | CPA Exam BEC | CMA Exam | Chp 7 p 1
 
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When a corporation or government wishes to borrow money from the public on a long-term basis, it usually does so by issuing or selling debt securities that are generically called bonds. In this section, we describe the various features of corporate bonds and some of the terminology associated with bonds. We then discuss the cash flows associated with a bond and how bonds can be valued using our discounted cash flow procedure. BOND FEATURES AND PRICES As we mentioned in our previous chapter, a bond is normally an interest-only loan, meaning that the borrower will pay the interest every period, but none of the principal will be repaid until the end of the loan. For example, suppose the Beck Corporation wants to borrow $1,000 for 30 years. The interest rate on similar debt issued by similar corporations is 12 percent. Beck will thus pay .12 × $1,000 = $120 in interest every year for 30 years. At the end of 30 years, Beck will repay the $1,000. As this example suggests, a bond is a fairly simple financing arrangement. There is, however, a rich jargon associated with bonds, so we will use this example to define some of the more important terms. In our example, the $120 regular interest payments that Beck promises to make are called the bond’s coupons. Because the coupon is constant and paid every year, the type of bond we are describing is sometimes called a level coupon bond. The amount that will be repaid at the end of the loan is called the bond’s face value, or par value. As in our example, this par value is usually $1,000 for corporate bonds, and a bond that sells for its par value is called a par value bond. Government bonds frequently have much larger face, or par, values. Finally, the annual coupon divided by the face value is called the coupon rate on the bond; in this case, because $120/1,000 = 12%, the bond has a 12 percent coupon rate. The number of years until the face value is paid is called the bond’s time to maturity. A corporate bond will frequently have a maturity of 30 years when it is originally issued, but this varies. Once the bond has been issued, the number of years to maturity declines as time goes by. BOND VALUES AND YIELDS As time passes, interest rates change in the marketplace. The cash flows from a bond, however, stay the same. As a result, the value of the bond will fluctuate. When interest rates rise, the present value of the bond’s remaining cash flows declines, and the bond is worth less. When interest rates fall, the bond is worth more. To determine the value of a bond at a particular point in time, we need to know the number of periods remaining until maturity, the face value, the coupon, and the market interest rate for bonds with similar features. This interest rate required in the market on a bond is called the bond’s yield to maturity (YTM). This rate is sometimes called the bond’s yield for short. Given all this information, we can calculate the present value of the cash flows as an estimate of the bond’s current market value.
Calculating Bond Issuance Proceeds
 
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What it the present value of a bond at issuance? Watch Roger Philipp, CPA, CGMA, use ‘present value’ as a verb as he explains the answer to the question in the video, 11.01 - Calculating Bond Issuance Proceeds. The face value of the bond is a lump sum, the coupon interest is an annuity. These are summed to find the present value of a bond at issuance. Use the effective interest rate to present value both the lump sum and the annuity! But is it an annuity due or an ordinary annuity due also known as annuity in arrears? In typical joking Roger fashion, Roger helpfully pats his own backside in order to demonstrate that an annuity in arrears is paid at the end of the year, which is the case with bond interest. Roger then shows how to handle the present value factor of an annuity for a bond that pays interest semi-annually instead of annually. What if the CPA Exam simply states a bond was issued at 101, or at 98? Roger explains what those numbers mean and how to calculate the bond issuance proceeds given only that information. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Now, how do you figure out how much to charge? How much cash should I charge you? How much cash should I charge you? How much cash should I charge you? Basically we're going to try to figure out what the carrying value or the amortized cost should be. In this case it’s a thousand net of a 100 is 900 which happens to be the cash. Here it happens to be a thousand which is a thousand. Here it happens to be a million one which is this plus this. Okay, there could be other factors that fall into that but we've got to figure out, okay, how much should the present value of the bonds be? When you’re present valuing the bonds, there are two things we need to present value. We need to present value the face and we need to present value the interest.
Views: 16225 Roger CPA Review
Governmental Accounting (Serial Bonds Issued, Debt Service Fund & General LT-Debt Group)
 
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Governmental Accounting for Special Assessment As Serial Bond, Payments made to Debt Service Fund & Recording General LT-Debt Account Group, Example: City is to construct a new roadway financed thru a special assessment to property owners (Issue a Special Assessment Serial Bond) (Levy Special Assessment to pay Serial Bond), (A) Capital Projects Fund (Accts. for Resources used in construction), (B) Debt Service Fund: Property Owners make payments to DSF & DSF makes pmts. Required by Serial Bonds, Governmental Accounting (Modified Accrual) Cannot accrue Revenue unless its (Available & Measureable), (C) General Long-Term Debt Acct. Group Accts. for Unmatured Principal of Obligation (Debt), detailed accounting by Allen Mursau
Views: 2619 Allen Mursau
Liabilities, Bonds Payable & Classification- Financial Accounting- C11- Professor Victoria Chiu
 
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Introduction to Financial Accounting Long-Term Liabilities, Bonds Payable & Classification of Liabilities on the Balance Sheet (Chapter 11) April 15th, 2013 by Professor Victoria Chiu The Professor starts this lecture with a brief overview of the learning objectives of chapter 11 and then moves on to discuss long term notes payable (displaying the appropriate journal entries involved). The steps include recording the current portion of long-term notes payable, recording the previously accrued interest, and accruing the interest that hasn't been accrued from the previous year. The Professor also walks the class through a problem focused on accounting for a long-term note payable. Following this, the Professor moves on to the topic of mortgages payable. Mortgages are debts backed with a security interest in specific property (most commonly in houses). Unlike long-term notes payable, mortgages are secured with interest in property. If the mortgage covers a time period more than a year, then the part that is due with the current year should be classified as current while the remaining part remains long-term. To best keep track of mortgages, an amortization schedule is often used (for which a very detailed and labeled illustration is shown). An amortization schedule keeps track of how much of your payment consists of interest, and how much consists of principal. The Professor also shows the journal entries involved for mortgages (the mortgage payable account is introduced). After completing coverage of mortgages, the Professor moves on to discuss bonds payable. Bonds are a liability that the company issues to bondholders (lenders) in hopes of raising capital for the firm. Firms resort to bonds because they require tons of capital to finance their ambitious, often large-scale operations. Bondholders receive interest on a semi-annual basis. There are several types of bonds. Term bonds are bonds that mature on a specific date (this is the most basic and straightforward type). Serial bonds are those that "mature" in installments (part of the bonds would be due every single year rather than the entire bond being due in one go). Secured bonds are those that are backed up (or "secured") by assets (similar to how mortgages are backed by real property). Debentures are the opposite of secured bonds; they are not backed by any assets. The Professor then goes on to emphasize that the price an individual would purchase a bond for (known as the issue price) is not necessarily equivalent to the bond's face value. Bonds can be issued (or sold) at any price agreed by the issuer and bondholder. While selling the bonds at face value is obviously an option, bonds can also be sold at a discount (a price less than the face value) or at a premium (a price above the face value). The Professor also goes on to show how face value, premium, and discounted bonds are written. A bond sold at face value, for example, would be written as "100." A bond sold at a premium would be written as "102." A bond sold at a discount would be written as "95." These numbers can be thought of as percentages of the original face value. -----QUICK NAVIGATION----- Overview of Learning Objectives: 1:19 Long-term Notes Payable: 1:59 Long-term Notes Payable - Payments: 7:54 Long-term Notes Payable - T-Accounts: 16:04 Exercise S11-1 - Accounting for a Long-term Note Payable: 17:52 Exercise S11-1 Solution Review: 21:06 Mortgage Payable: 26:38 Amortization Schedule: 31:41 Mortgage Payable (Revisited): 42:06 Amortization Schedule (Revisited): 43:43 Bonds Payable: 47:23 Types of Bonds: 54:42 Bond Issuing Price: 57:16 Bond Interest Rates: 1:02:15 Bond Prices: 1:04:29 Exercise S11-3 Determining Bond Prices:1:05:56 Issuing Bonds Payable at Maturity (Par) Value: 1:07:52 To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html
Views: 13055 Rutgers Accounting Web
Accounting Lecture 14 - Gains and Losses from Bond Retirements
 
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From the free study guides and course manuals at www.my-accounting-tutor.com. Recording gains and losses from the early redemption of callable bonds.
Views: 25599 Craig Pence
How to Determine the Carrying Value of Bonds
 
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This video shows how to calculate the carrying value of a bond throughout the life of the bond. The initial carrying value is the issue price of the bond. This carrying value is then adjusted each period (adjusted upward if the bond was issued at a discount, downward if the bond was issued at a premium). Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like Edspira on Facebook, visit https://www.facebook.com/Edspira To sign up for the newsletter, visit http://Edspira.com/register-for-newsletter Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin To follow Michael on Facebook, visit https://www.facebook.com/Prof.Michael.McLaughlin
Views: 7836 Edspira
Bond Retirement
 
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In the video, 11.04 - Bond Retirement, Roger Philipp, CPA, CGMA, sets up the journal entry to retire a bond by first reviewing the initial issuance journal entry, then turning it around into a bond retirement journal entry. He discusses, Debit Bonds Payable, debit any unamortized premium or credit any unamortized discount, credit any unamortized bond issue costs and credit Cash for the amount paid to retire the bond. Please note that the plug will be the gain or loss. If the plug is a debit, it’s a loss on bond retirement; if the plug is a credit, it’s a gain on bond retirement. Roger also briefly covers bond sinking funds in this lesson. In the next lesson, it will be time to apply all this bond knowledge to working through questions! Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: All right, let's talk about bond retirement. So, we've talked about issuing a bond. And, remember issuing a bond. Credit bonds payable, accrued interest, cash, boom, boom. This is BIC, this is discount or premium. Now, early retirement of bonds. So what this says is, the bond may be called, it may be retired prior to once it matures. In other words, it's a five year bond, but two years in, they call it back. Basically, it's the opposite of the entry we just did. So, as we look through this, it's the opposite of the journal entry.
Views: 13500 Roger CPA Review
Accounting 2 - ACCT 122 - Program #215 - Issuing Bonds at a Premium
 
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Accounting 2 - ACCT 122 - Program #215 - Issuing Bonds at a Premium
Views: 9422 JCCCvideo
13 -- Bond Pricing and Bonds Issued at Par / Straight-Line Method
 
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An overview of bond pricing and bonds issued at par under the straight-line method, to accompany http://www.principlesofaccounting.com Chapter 13, Long-Term Obligations. *Check out the Classroom page to find out how to take this course for credit: http://www.principlesofaccounting.com/classroom.html
Views: 19328 Larry Walther
Accounting 2 - ACCT 122 - Program #214 - Issuing Bonds at a Discount
 
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Accounting 2 - ACCT 122 - Program #214 - Issuing Bonds at a Discount
Views: 14678 JCCCvideo
Examples BE 16-1 & BE 16-2: Convertible Bonds | Intermediate Accounting | CPA Exam FAR
 
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Stock options, convertible securities, convertible preferred stock, conversion feature, book value method, fair value, induced conversion, convertible debt
Accounting Unit 8 - Part 1 - Accounting for Bonds - Discounts
 
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Links to files stopped working on these old videos. Check out my new playlist (with working links) here: https://youtu.be/mIC2cvX7JYE This video shows the basics of bonds and using the effective interest method to deal with bonds issued at a discount. This video and the attached worksheet were prepared by Tony Bell of Thompson Rivers University (TRU) - I encourage educators to freely use, edit and modify these videos and the attached worksheet - they are available under Creative Commons Licenses.
Views: 10848 Tony Bell
Accounting for bonds issued at par value
 
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A discussion on the accounting for bonds issued at par value. Covers issuance to bond pay-off.
Views: 268 Lynnette Yerbury
Intro to Financial Accounting: Bonds Issued at Discount & Premium; Stockholder's Equity
 
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Introduction to Financial Accounting Professor Alexander Sannella Lecture 21 00:12 Review on Recording Bonds issued at discounts (verbal) 06:03 Recording Bonds Issued at a discount 06:58 Example 08:05 Recording Discounted bonds 17:52 Straight line - Amortization Table (discount) 19:36 Example 23:20 Recording Bonds Issued at a Premium 24:15 Example (verbal) 31:22 Journal Entry 34:25 Amortization Table (premium) example 36:05 Journal Entry Questions and Answers 39:46 Question 1 46:10 Question 2 52:07 Question 3 Learning Objective 4 56:06 Retirement of Bonds at Maturity + Journal Entry 56:56 Retirement before Maturity 59:36 Reasons for retiring bonds early 1:02:05 Example of retirement before maturity + Journal Entry Learning Objective 5 1:06:24 Balance Sheet Example Learning Objective 6 1:06:45 Debt Equity Ratio Chapter 13 Learning Objective 1 1:10:57 Stockholder's Equity (Definitions of Stock Terms) When the bond interest rate is greater than the market rate, the bonds are issued at a premium. The difference between the bonds payable and the cash received is recorded as a bond premium (an adjunct account). The premium is amoritzed over the life of the bond, reducing interest expense to the lower market rate. When the bond interest rate is less than the market rate, the bonds are issued at a discount. The difference between the bonds payable and the cash received is recorded as a bond discount (contra-liability). The discount is amortized over the life of the bond, increasing interest expense to the higher market rate. Bonds can be retired before maturity by an open market repurchase or a "call." Bonds can be called at par or a price above par (which is par plus a call premium). A company will retire bonds before maturity for a variety of reasons: (1) To refinance in order to take advantage of lower market interest rates, (2) the company has excess cash and would like to avoid future interest changes and create greater financial flexibility, (3) to improve the company's debt to equity ratio, and (4) to comply with other debt agreements. When retiring before maturity, the full bonds payable will typically be retired. The remaining discount or premium will be removed. The cash paid will not equal the face value. The difference will be recorded as either a gain on retirement of bonds (cash paid to retire is less than the carrying value) or a loss on retirement of bonds (cash paid to retire is more than the carrying value). A corporation is a separate entity created by law that is separate and distinct from its owners and its continued existence is dependent upon the corporate statutes of the state in which it is incorporated. Classification by ownership distinguishes between publicly held and privately held corporations. The primary objectives for accounting for stock holder's equity are to: (1) separately disclose each source of equity (due to widespread ownership and the owner-manager separation), and (2) to disclose all rights or any restrictions of rights of each class of equity security. The stockholders' equity section of the balance sheet includes several parenthetical disclosures: the terms are: authorized shares, issued shares, and outstanding shares. Authorized shares is the maximum number of shares of stock that a company can issue. It is specified in the company's charter. Issued shares are the total number of a company's shares that have been sold or distributed to shareholders over time. Outstanding shares are the number of shares of a corporation's stock that are in the hands of investors. Outstanding shares are issued shares less treasury shares. Treasury shares are the number of issued shares that have been previously issued and later reacquired by the corporation. To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html
Discount and Premium Amortization on Bonds
 
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http://www.accounting101.org An example problem on discount and premium amortization on bonds.
Views: 18699 SuperfastCPA
CONVERTIBLE BONDS EXPLAINED - TESLA CONVERTIBLE BOND EXAMPLE
 
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What is a convertible bond! A convertible bond is a debt instrument issued by a company in order to get financing. The company will pay a periodic interest rate on the borrowed amount and, like any other bond, the bond has a maturity date. But, unlike other bonds, the holder of the bond can choose between getting his money back or, converting his bonds for a pre-set number of shares in the company or common stocks. The decision depends on the value of the shares in that moment. If the market value of the shares is higher than the bond principal, it is better to convert. If the market value of the shares is lower, it is better to require the debt to be repaid. This video will discuss: What is a convertible bond - definition Why do companies issue convertible bonds - convertible bond advantages Why do investors buy convertible bonds Convertible bonds accounting What do you need to know as an investor in stocks that issue convertible bonds 3 convertible bond examples (Tesla convertible bond, Ctrip, 51Jobs) How do convertible bonds affect earnings (a bit of accounting) Convertible bonds conclusion What do I do? Full-time independent stock market analyst and researcher! STOCK MARKET RESEARCH PLATFORM (analysis, stocks to buy, model portfolio): https://sven-carlin-research-platform.teachable.com/p/stock-market-research-platform Check the comparative table on my Stock market research platform under curriculum preview! I am also a book author: Modern Value Investing book: https://amzn.to/2lvfH3t More at the Sven Carlin blog: https://svencarlin.com Stock market for modern value investors Facebook Group: https://www.facebook.com/groups/modernvalueinvesting/
Bond Terminology
 
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Bonds are typically heavily tested on the FAR section of the CPA Exam. So, in the 11.01 - Bond Terminology video, Roger Philipp, CPA, CGMA, begins to lay the groundwork for understanding bonds by providing definitions of some key terms and concepts. It’s important to demystify and understand all the terms that may show up about bonds on the CPA Exam. Some bond questions that Roger answers in the video are, "Why are some bonds issued at a premium? Are bonds debt or equity? Why are some bonds issued at a discount? How does the relationship between the bond yield and the bond coupon rate affect whether the bond is issued at a discount or premium?" It's important to remember that market rate is the same as yield is the same as effective rate, and that the stated rate is the same as coupon rate is the same as face rate is the same as nominal rate. Also, carrying value equals book value equals reported amount. The basic formula for carrying amount is face value plus or minus unamortized bond discount or bond premium. Don't understand term bonds, serial bonds, debenture bonds? No to worry, Roger explains it all in the video. By the end of this lesson, you will be ready to go into some numbers-heavy Bond Issuance Examples. Connect with us: Website: https://www.rogercpareview.com Blog: https://www.rogercpareview.com/blog Facebook: https://www.facebook.com/RogerCPAReview Twitter: https://twitter.com/rogercpareview LinkedIn: https://www.linkedin.com/company/roger-cpa-review Are you accounting faculty looking for FREE CPA Exam resources in the classroom? Visit our Professor Resource Center: https://www.rogercpareview.com/professor-resource-center/ Video Transcript Sneak Peek: Welcome, welcome. Today we're going to talk about bonds and present value techniques because it's important to understand the concept of present value. A bond is a very important area, very heavily tested and there's a whole bunch of different new ones, is a big word for me that relates to bonds. What is a bond? A bond is a borrowing agreement whereby the issuer of the bond promises to pay you, the purchaser of the bond, a certain amount of money after a certain period of time at a certain interest rate. That is what the purchaser of the bond or the issuer rather of the bond is promising to give to the purchaser.
Views: 24399 Roger CPA Review
Accounting Basics 8.1: Accounting for Bonds - Discounts
 
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Link to question from video: http://bit.ly/1mFdPP6 Link to table from video: http://bit.ly/1ijpJsC This video shows the basics of bonds and using the effective interest method to deal with bonds issued at a discount. Here is a online class accounting with a serial 40 online accounting lessons for you. With my accounting classes, you must not go to schools in accounting to training for accountant. Subscribe for more lessions, all free :) Go to: http://www.accountingworkbook.com/ to download the problems.
Views: 6124 Online Courses
Accounting Unit 8 - Part 2 - Accounting for Bonds - Premiums
 
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Links to files stopped working on these old videos. Check out my new playlist (with working links) here: https://youtu.be/mIC2cvX7JYE This video shows the basics of bonds and using the effective interest method to deal with bonds issued at a premium. This video and the attached worksheet were prepared by Tony Bell of Thompson Rivers University (TRU) - I encourage educators to freely use, edit and modify these videos and the attached worksheet - they are available under Creative Commons Licenses.
Views: 4493 Tony Bell
Original issue discount series E and EE bonds
 
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Constructive receipt, original issue discount, series E, Series EE, fruit and tree metaphor, assignment of income, interest income, Income tax course, cpa material, free cpa material, regulation exam, cpa exam,
Bond Discount or Premium?
 
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Bond discount and premium calculation basics and the resulting after tax costs. Get more answers at our forum for finance and accounting at passingscoreforum.com
Views: 10342 Passing Score
Accounting Basics 8.2: Accounting for Bonds - Premiums
 
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Link to question from video: http://bit.ly/1kKZjWL Link to table from video: http://bit.ly/1ijpJsC This video shows the basics of bonds and using the effective interest method to deal with bonds issued at a premium. Here is a online class accounting with a serial 40 online accounting lessons for you. With my accounting classes, you must not go to schools in accounting to training for accountant. Subscribe for more lessions, all free :) Go to: http://www.accountingworkbook.com/ to download the problems.
Views: 3424 Online Courses
Accounting for Bonds Issued at a Premium
 
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Discussion of a bond payable issued at a premium. Includes examples of both the effective and the straight line methods of interest amortization.
Views: 88 Lynnette Yerbury
Review of Bonds, Notes, Issuance Price, Bond Retirement | Financial Accounting | CPA Exam FAR
 
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bond indenture, Bonds payable, covenants, Long-term notes payable, Secured, Unsecured bonds, Term, Serial, and Callable bonds, Convertible, Commodity-Backed, Deep-Discount bonds, Registered bonds, Bearer bonds, coupon bonds, Income, Revenue bonds, Bond valuation, bond pricing, bond interest expense, par value, amortization, straight line method, effective interest rate method, bond discount, bond premium, carrying value of bond, premium, discount, bond issue between interest dates, CPA EXAM
Accounting for bonds issued at a premium
 
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Demonstration of accounting for bonds issued at a premium using both the straight line and the effective interest methods of amorization.
Views: 56 Lynnette Yerbury
Module 9 Video 2 - Bonds issued at a Discount - Problem 9-3A
 
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Go to: http://www.accountingworkbook.com/ to download the problems. Link to template: http://www.accountingworkbook.com/uploads/4/9/8/9/49896931/bond_effective_interest_table.xlsx Module 9 examines bonds and liabilities. We learn how to account for bond discounts and premiums using the effective interest method.
Views: 9446 Tony Bell
Accounting for Convertible Bonds (Definition)  | Types of Bonds
 
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In this video on Accounting for Convertible Bonds, we will study the definition, parts of convertible bonds accounting and types of bonds. 𝐖𝐡𝐚𝐭 𝐚𝐫𝐞 𝐂𝐨𝐧𝐯𝐞𝐫𝐭𝐢𝐛𝐥𝐞 𝐁𝐨𝐧𝐝𝐬? --------------------------------------------------- Convertible bonds entitle bondholders to transfer their bonds into a finite number of the issuing company's shares, at time of their maturity. 𝐂𝐨𝐧𝐯𝐞𝐫𝐭𝐢𝐛𝐥𝐞 𝐁𝐨𝐧𝐝𝐬 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐢𝐧𝐠 ------------------------------------------------------- Accounting will be divided into three parts: #1 - Issue of Bonds #2 - Annual Coupon Payments #3 - Settlement of Bonds 𝐓𝐲𝐩𝐞𝐬 𝐨𝐟 𝐁𝐨𝐧𝐝𝐬 -------------------------------- #1 - Collateral trust bonds #2 - Guaranteed bonds #3 - Convertible Debt #4 - Debentures #5 - Zero coupon bonds To know more about 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐢𝐧𝐠 𝐟𝐨𝐫 𝐂𝐨𝐧𝐯𝐞𝐫𝐭𝐢𝐛𝐥𝐞 𝐁𝐨𝐧𝐝𝐬, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/accounting-for-convertible-bonds-debt-notes-example/ Subscribe to our channel to get new updated videos. Click the button above to subscribe or click on the link below to subscribe - https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUw?sub_confirmation=1
Views: 76 WallStreetMojo