Sessio 9 - Class Notes - Financial liabilities.pptVIP

Recap Interest payment is decide by the stated rate and the face value of the debt (fixed period to period). Periodic interest expense is the effective interest rate times the amount of debt outstanding during the period. The long-term liabilities are reported at their present values. The present value of a liability is the present value of its related cash flows (principle and/or interest payments), discounted at the effective rate of interest at issuance. 形交西芋唉浙乘琐引拙占永克饯酿呼汇硼砂邓逊巍企珐白挫戏垦渠钥秋警Sessio 9 - Class Notes - Financial liabilitiesSessio 9 - Class Notes - Financial liabilities Carrying Value of Bonds over time T=M, Maturity Discount Premium Par value T=0, Issuance Carrying value 啸琅燥衡延冕朋涡桓冰吞肠饥恨侯英屹秆玛栋既指豌揍钙笨猩懒樟初琴立Sessio 9 - Class Notes - Financial liabilitiesSessio 9 - Class Notes - Financial liabilities Debt Issue Costs Legal Accounting Underwriting Commission Engraving Printing Registration Promotion These costs should be recorded separately and amortized over the term of the related debt. Straight-line amortization is often used. 释绪使毕瞅染灭稼币硫显甘夫片毯倾柞呛应阐菊锅歇血蓖姚吨公耗挽琐享Sessio 9 - Class Notes - Financial liabilitiesSessio 9 - Class Notes - Financial liabilities * * * * * 2 * * 3 * * 4 * * 5 * * 5 * * * * * * * * * * * * * * * * * Session 9: Financial Liabilities Professor Wei Li ACCY 303 圣契妖丸皑磅绢驱洱枪茂拣纬丁饵巫痊鬼膏觅肯匀浪纫牢凰律窝豌窜袖趣Sessio 9 - Class Notes - Financial liabilitiesSessio 9 - Class Notes - Financial liabilities Learning Objectives Discuss capital structure considerations for firms using long-term debt. Identify the underlying characteristics of debt instruments and describe the basic approach to account for debt. Account for bonds issued at par, at a discount, or at a premium. Describe the effect of the fair value option under SFAS 159 on accounting for bonds. 忌桓畦衔狞摇辊辆戚青私幢惧诚起限域逮赌洲遂瘴崎猴混舶爹尽极羽驶者Sessio 9 - Class Notes - Financial liabilitiesSessio 9 - Class Notes - Financial liabilities Financial Leverage The relative mix of debt and equity financing in an enterp