Recording Bonds under GAAP

The video tutorial explains how to record a bond issuance under GAAP principles. It covers the impact on the balance sheet, including asset inflow and liability recording, and how to handle bonds issued at face value, discount, or premium. The tutorial also discusses the income statement, focusing on financing activities and revenue. Lastly, it addresses issuance costs, detailing their treatment as deferred charges and their effect on net revenue.

When recording a bond issuance at face value, what should match the cash inflow on the balance sheet?

• The value of the bond payments

• The issuance costs

• The discount on the bond

• The premium on the bond

How are proceeds from a bond issuance recorded on the income statement?

• As an operating activity

• As a financing activity

• As an investing activity

• As a deferred charge

What is the initial treatment of issuance costs on the balance sheet?

• As a revenue

• As a deferred charge

• As an expense

• As a liability

Over what period are issuance costs amortized?

• The life of the bond

• The fiscal year

• The first quarter

• The first month

How do issuance costs affect the financing activity revenue on the income statement?

• They are added to the revenue

• They are subtracted from the revenue

• They are recorded as a separate expense

• They do not affect the revenue