Non Current Liabilities

The term used for bonds that are unsecured as to principal is

• junk bonds.

• debenture bonds.

• indebenture bonds.

• callable bonds.

Bonds that pay no interest unless the issuing company is profitable are called

• collateral trust bonds.

• debenture bonds.

• revenue bonds.

• income bonds.

The rate of interest actually earned by bondholders is called the

• stated rate only.

• yield rate only.

• effective rate only.

• effective, yield or market rate.

Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to

• the market rate multiplied by the beginning-of-period carrying amount of the bonds.

• the market rate of interest multiplied by the face value of the bonds.

• the stated (nominal) rate of interest multiplied by the face value of the bonds.

• the stated rate multiplied by the beginning-of-period carrying amount of the bonds.

The amortization of a premium on bonds payable

• decreases the balance of the bonds payable account.

• increases the amount of interest expense reported.

• increases the carrying amount of the bond.

• increases the cash payment to bondholders.

When a note payable is issued for property, goods, or services, the present value of the note may be measured by

• the fair value of the property, goods, or services.

• the fair value of the note.

• using an imputed interest rate to discount all future payments on the note.

• All of these answer choices are correct.

In a debt extinguishment in which the debt is settled by a transfer of assets with a fair value less than the carrying amount of the debt, the debtor would recognize

• no gain or loss on the settlement.

• a gain on the settlement.

• a loss on the settlement.

• None of these answer choices are correct.

Note disclosures for long-term debt generally include all of the following except

• names of specific creditors.

• call provisions and conversion privileges.

• restrictions imposed by the creditor.

• assets pledged as security.

If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a

• debit to Interest Payable.

• credit to Interest Receivable.

• credit to Interest Expense.

• credit to Unearned Interest.

Everhart Company issues €10,000,000, 6%, 5-year bonds dated January 1, 2019 on January 1, 2019. The bonds pays interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

• €10,000,000

• €10,432,988

• €10,437,618

• €10,434,616