Exam 12: Non-Current Financial Liabilities

Based on the characteristics provided below,what kind of bond is being discussed? 1.________ are a set of bonds issued at the same time but that mature at regular scheduled dates rather than all on the same date. 2.________ are bonds that never mature. 3.________ allow the holder to exchange the bond into other securities in the corporation,usually common shares. 4.________ protect investors against inflation.

On May 5,2017,Bennix sold $1,000,000 of five-year,3% bonds for $900,500. From the proceeds,the company paid fees of 100,000.Interest is payable semi-annually on May 5 and November 5.What is the effective rate of interest to 2 decimal places?

On May 1,2017,SBC INC.buys a computer listed for $12,600.The office supply store agrees to accept a $1,600 down payment and a $11,000,three-year note payable at $3,500 per year.The company's banker has suggested that an appropriate market rate is 11% per annum for loans that mature in one year or less and 14% for loans with longer maturities.At what amount will the note be recorded at in the accounting records?

Explain what an "in-substance defeasance" is and whether this arrangement results in the derecognition of a financial liability.

A $100,000 5-year 6% bond is issued on January 1,2012.The bond pays interest annually.The market rate is 8%.What is the selling price of the bonds,rounded to nearest dollar?

On May 1,2017,SBC INC.buys a photocopier listed for $2,900.The office supply store agrees to accept a $800 down payment and a $2,100,three-year note payable at $798 per year including interest at 7%.The company's banker has suggested that an appropriate market rate is 11% per annum for loans that mature in one year or less and 14% for loans with longer maturities.At what amount will the photocopier be recorded at in the accounting records?

What are "secured bonds"?

Which statement is correct about the financial leverage of a company with an equity base of $400,000?

What are "non-current liabilities"?

What are the reasons for issuing bonds rather than using a bank loan?

Why are banks able to pay such low interest rates on customer deposits?

Cynthia Dixie Accounting Inc.takes advantage of a well-known office furnishings store's low-interest-rate financing.Cynthia buys furniture on the first day of its fiscal year,signing a $19,000,five-year note.The note is payable in full at maturity.Interest is payable annually at 2%.The market rate of interest for similar transactions is 5%. Required: Prepare journal entries to record: a.The purchase of the office furniture. b.The payment of interest and related amortization of the discount at the end of year 1.

When will bonds sell without a premium or discount?

Which statement is correct about offsetting?

Contrast the differences between IFRS and ASPE for financial liabilities using the following table:

Which of the following would be a "non-current liability"?

What are "callable bonds"?

What is meant by the "spread" charged by banks on loans?

Why do companies sell notes directly to the investing public?

Bailey's Gold Mines Inc.(BGMI)purchases a piece of land for the purpose of developing a gold mine.BGMI is legally required to remove all structures and convert the mine site to a wildlife sanctuary at the end of its estimated 10-year useful life.BGMI estimates that it will have to spend $11,000,000 to decommission the site and reclaim the land when operations cease.The present value of this $11,000,000 site restoration cost,assuming a discount rate of 5%,is $6,753,046.BGMI uses straight-line depreciation. Required: Prepare the journal entries to recognize this site restoration cost the company would record upon initial acquisition and subsequently.