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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: 23674 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: 33823 Notepirate
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: 27202 Roger CPA Review
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
Issuing bonds at par
 
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Views: 164 Rex Jacobsen
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: 66130 Edspira
Issuing Bonds at a Discount Exercise 14-2
 
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Moss issues bonds with a par value of $86,000 on January 1, 2011. The bonds' annual contract rate is 6%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $81,490. 1. What is the amount of the discount on these bonds at issuance? (Omit the "$" sign in your response.) 2. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate calculations. Omit the "$" sign in your response.) 3. Prepare an amortization table for these bonds; use the straight-line method to amortize the discount. (Make sure that the unamortized discount is adjusted to "0" and the carrying value equals to face value of the bond in the last period. Leave no cells blank - be certain to enter "0" wherever required. Round your intermediate calculations and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Views: 8334 FacebookMarketingCom
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: 267 Lynnette Yerbury
Issuing Bonds at a Discount
 
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Issuing Bonds at a Discount
Views: 550 Rex Jacobsen
Issuing Bonds, Paying Interest and Redeeming Bonds
 
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Issuing bonds at par, accruing for interest expense, paying interest expense and redeeming bonds at a premium.
Views: 48 Russell Jacobus
Issuing Bonds at a Discount
 
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To show how to compute the price of a bond, to prepare an amortization table, and record the journal entries related to a bonds issued at a discount.
Views: 518 Foundation2Know
Bonds at a discount
 
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Issuing bonds at a discount, paying semiannual interest at the same time as amortizing bond discount and retiring the bond at maturity
Views: 504 Cheri Bergeron
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
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: 19199 Larry Walther
Bonds - Par Value and more
 
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Bonds - Par Value and more
Views: 16685 Engineer Clearly
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: 3126 Accounting Videos
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: 107516 Edspira
14.2 Bond Issuance at par
 
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Discusión de las transacciones contables para reconocer un bono que se emite a su valor par.
Bond Issued at Par - Journal Entry to Record Issue Bonds at Par
 
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A bond issued at par is the most simple type of bond to record because it will not result in a discount or premium. A bond may be issued at par if it was made very closed to the distribution date because this is when it is most likely that the stated rate matches the market rate. If the stated rate does not equal the market rate it will result in a discount or premium. The journal entry to record a bond issued at pare is a debit to cash and a credit to bonds payable, a liability accounting. For more information see accounting website. http://accountinginstruction.info/
Accounting for Bond Issues
 
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Prepared by paige Paulsen
Views: 186 Paige Paulsen
Example BE 14-2 (Colson Co): Bond Issue at Par | Intermediate Accounting | CPA Exam FAR
 
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par value bond, 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 bond retirement, extinguishment of debt, debt extinguished, gain on bond retirement, loss on bond retirement, Bond valuation, bond pricing, bond interest expense, par value, amortization, straight line method
Bonds Payable- Time Value of Money and issuing a bond at par (market = stated rate)
 
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The links for the present value tables used in my bond videos are from www.accountingexplanation.com: http://www.accountingexplanation.com/present_value_1_table.PNG http://www.accountingexplanation.com/present_value_ordinary_annuity_table.PNG
Issuing Bonds at Face Value
 
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An introduction to pricing bonds and the journal entries for bonds sold at face value.
Views: 132 Russell Jacobus
Bond Issued at Par
 
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Bond Issued at Par
15 - Issuing Bonds at a Discount - (Straight Line Amortization)
 
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Issuing Bonds at a Discount - Straight Line Amortization
Views: 815 AccountingBytes
Bond Issued At Discount Versus Premium How To Calculate And Amortize The Bond
 
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Understand the dfference between a bond purchased (issued) at a discount versus a bond purchased (issued) at a premium, bond has two cash flows, (1) face value or principal amount paid at maturity and (2) interest payment (usually semi annual) based on the stated rate of interest on the bond, example shown as a cash flow diagram, present value (PV) what its worth when issued (issue date) based on discounting bonds cash flows (maturity value + interest payments) back to issue date using the market rate of interest, comparing the bonds present value to its future value (face value) determines whether the bond is purchased (issued) at a discount or premium amount, for a discount (bonds PV is less than on the bonds face value) while for a premium(amount the PV is greater than its face value), detailed example comparing amortization schedules for bond discount versus bond premium, details cash interest payments (stated rate of interest x bond face value), interest expense (market rate x carrying value of bond outstanding debt), amortized interest expense (interest payment - interest expense),subtract amortized premium to the bonds carrying value to determine the bonds new carrying value (bond amortization),
Views: 34230 Allen Mursau
Bonds - Issue Bonds at Premium
 
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Journal Entries
Views: 77 Tracy L. Morgan
Bond Issue (Bond Retired Between Interest Dates By Issuing Common Stock, Loss Realized)
 
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Accounting for bonds retired between interest payment dates using common stock and realizing a loss on the redemption of the bonds, example Corp-A issued $1,500,000 of 11%, 15-year bonds at 97 (97%) on (4/1/20X1), on (3/1/20X2) bonds of par value of $600,000 are retired by issuing 20,000 shares of its $10 par common stock plus accrued interest paid, C/S was selling for $31/share, interest is payable semi-annually on (4/1) and (10/1) on Bonds Corp-A uses the Straight-Line Method of amortization for bond premium or discount, calculate the remaining amortization on the bonds being retired, compare the reacquisition cost (market value of stock issued in this example) with the bonds carrying amount, if paid more to retire the bonds than the carrying amount a loss is realized, common stock is issued, detailed accounting by Allen Mursau
Views: 301 Allen Mursau
Bond Issue (Bond Issued Between Interest Dates, Amortized, Accrued Interest, Interest Expense)
 
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Accounting for a bond issued between interest payment dates, allocating the interest expense based on issue date and the stated date of the bond, example: Corp-A issued $900,000 of 12%, 10-year bonds on (5/1/20X1), at 106 (106% of par), interest is payable semi-annually on (7/1) and (1/1), Corp-A uses the Straight-Line Method of amortization for bond premium or discount, Straight-Line Method amortizes a constant amount each interest period (10 yrs x 2 x yr = 20 semi-annual payments), Total months (10 yrs x 12 mths = 120 mths), Amortized mths (120 mths - 4 mths issued = 116 mths amort.), Actual amortized since Bond issued 4 mths after stated date: (Bond stated date 1/1/20X1, issued on 5/1/20X1), (1) Buyers of bonds pay seller interest accrued from the last interest pmt date (1/1/X1) to the date of issue (5/1/X1), On the next semi-annual interest payment date, buyer will receive the full semi-annual interest payment (7/1/X1), detailed accounting by Allen Mursau
Views: 7758 Allen Mursau
Amortizing a Bond Discount Using the Effective Interest Rate Method
 
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An example of issuing bonds at par as well as issuing bonds at a discount and amortizing that discount using the straight-line method AND the effective interest rate method.
Views: 44 Russell Jacobus
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: 14372 JCCCvideo
Issuing Bonds Payable at Maturity Par Value
 
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Please like our Facebook page at https://www.facebook.com/rutgersweb To watch the entire video of this lecture, go to https://www.youtube.com/watch?v=_-ZMtAGxuq0 To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html
How Come Bonds Aren't Always Issued at Par?
 
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The video demystifies the cause of many bonds being issued at a price different from par. The presentation addresses how market yields relative to coupon rates will impact issue price and why the coupon setting conventions followed by many issuers result in offering prices of new issues usually being at a discount to the security’s face values. InsidersGuideToFinance.com facebook.com/InsidersGuideToFinance
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
Bonds Issued at par | Bonds Issued at Discount | Bonds issued at Premium | CH 12 part 2
 
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This video discusses bonds issued at par, bonds issued at discount, bonds issued at premium, bond indenture, convertible bonds, registered bonds and revenues bonds. https://www.youtube.com/playlist?list=PLxP0KZzCGFYMjXTjtmIN05ovj73dc-cW3 My website: https://farhatlectures.com/ Facebook page: https://www.facebook.com/accountinglectures LinkedIn: https://goo.gl/Pp2ter Twitter: https://twitter.com/farhatlectures Email Contact: [email protected]
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: 9646 Passing Score
09 69 Bond payable issued at PAR
 
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a straightforward bond payable issued at PAR value on an interest date
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: 6391 mattfisher64
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: 21242 Roger CPA Review
Bond Valuation YTM Yield to Maturity - CA Final SFM (New Syllabus) Classes & Video Lectures
 
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For More Visit our website - https://sfmguru.in/ Buy Rewamp & revise the entire SFM in 1 day: https://sfmguru.in/revamp-ca-final-sfm-revision-book/ Subscribe to Channel for more videos: https://www.youtube.com/channel/UCiPzkqrzDsoq-pLrloT7Fcw/featured Yield to Maturity This is a rate of return which is generated by a bond over a period up to its maturity. If the future cash flows of interest and redemption price are discounted using YTM, the present value of such cash flows will be equal to its actual market price. In other words, a rate of discounting which can make the intrinsic value equal to the actual market price can be considered as YTM Rate. For example, if a bond is issued at par with face value of ` 1,000 and redeemable at par with coupon rate of 10% per annum is actually providing the yield of 10% per annum. In other words, the YTM of such bond shall be 10% per annum. However, in the same example if the bond is redeemable at premium, other things remaining same, it would obviously provide an yield higher than 10%. Annuity Bonds These bonds are paid over a period of time by the same amount of cash flows each year. Therefore, there is neither any coupon payment nor any redemption price. All the cash flows of these bonds are spread over their life by way of annuities. These are bonds which would repay the principal over its life along with interest by way of constant cash flows. For example, a bond that is issued at ` 1,000 with 5 years life provides an annuity of ` 260 per annum at end of each year over its life of 5 years. The total cash flows over 5 years will be (` 260 x 5) = ` 1,300 This includes the principal repayment of ` 1,000 and the total interest of ` 300. Changes in Intrinsic Value of Bond as it approaches its Maturity (Inter-relationship between Intrinsic value and Redeemable Value) The intrinsic value of the bond gets closer to the redemption price as and when the bond approaches its maturity. If a Premium Bond is redeemable at par, its intrinsic value constantly declines over time. If a Discount Bond is redeemable at par, its intrinsic value constantly rises over time. Zero Coupon Bonds (ZCB) These are bonds which do not provide any coupon payments. In other words, there is no interest payable on such bonds. These bonds are either issued at nominal discount or at par and redeemable at a significant premium. The present value of cash flows from this bond considers only the present value of redemption price which is its intrinsic value. With maturity date coming closer the intrinsic value of such bonds increases. Deep Discount Bonds (DDB) These are such zero coupon bonds, which are redeemable at par but issued at significant discount. Callable Bonds A callable bond is such a bond that provides an option to the issuer to call for redemption at an earlier date as compared to maturity. Such bonds are generally redeemed before maturity if the interest rate in the market declines. Inversely if the interest rate increases the issuer will opt for redemption of the bonds at the specified maturity date only. The call date is a specified date at which the issuer can call for premature redemption. The call price of a bond generally is higher than the redemption price payable on maturity, in order to compensate the investor. Yield to Call (YTC) YTC is applicable only for callable bonds. YTC is determined just like YTM. The only difference is, while determining YTC the applicable date of redemption will be the call date and not maturity date and the redemption value applicable at the call date shall be considered in place of redemption at maturity. #Bonds , #Finance , #CAFinal , #FinancialLearning , #CAFinalSFM , #StrategicFinancialManagement , #SFM ,
Views: 2436 CA Nikhil Jobanputra
Stock Warrants Detachable Issued With Bonds Relative Fair Value (Proportional) Method
 
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Bonds issued with detachable stock warrants (warrants attached to bonds as debt security, debt for equity swap), stock warrant gives the holder of the warrant the opportunity to buy a specified number of shares of common stock at a specified price, detachable stock warrants can be sold separate from the bond, at time of issuance example will use the relative fair value (proportional) method allocates bond between liability and equity portions based on the relative percentage of the bonds present value and fair value of conversion rights, multiplying the relative percentage for debt and equity times the bonds issue price (either at par, discount value, or premium value, what ever is the case) allocates the debt and equity portion for the bond debt, balance sheet journal entries (T accounts) shown on balance sheet template, accounting detailed and calculations required explained by Allen Mursau
Views: 3221 Allen Mursau
Bond Issued With Stock Warrants (Detachable Vs Non-detachable Warrants, PIC,Discount)
 
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Accounting for bonds issued with stock warrants, comparing detachable versus non-detachable stock warrants, affect on paid-in-capital and any bond discount or premium, example based on the proportional method to allocate the detached warrant values between bonds & warrants, Detachable Warrant can be separated from the security & traded as a separate security, Non-detachable Warrant stays with the security (bond), by purchasing a bond with warrant or the warrant separately the buyer receives the right to buy Stock (equity) at a fixed price in the future, with a detachable warrant the value allocated to the warrant increases equity paid-in-capital, non-detachable warrant there is no separate recognition for the warrant, example Corp-A issued 4,000 of $1,000 Bonds at 101 (101% par), each Bond was issued with (1) detachable Stock Warrant, 1-After issuing Bonds were selling at 98 (98% of par) without warrant, the Warrants had a market value of $40 ea, Bonds & Warrants each could be sold separately, detailed accounting by Allen Mursau
Views: 7824 Allen Mursau
Journal Entries for Bond Issuance
 
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This is the fourth video in the bond series. In this video, I review how to record the journal entries needed to record bond issuance under three different circumstances: par, premium and discount. I use the same figures used throughout the rest of the bond videos. For more help with accounting, please visit my website http://AccountingInFocus.com.
Views: 11199 Kristin Ingram
Financial Accounting:  Bond Prices (Maturity / Par, Discount, Premium)
 
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Introduction to Financial Accounting Bond Prices : Maturity / Par, Discount, Premium (Chapter 11) April 17th, 2013 by Professor Victoria Chiu **NOTE: This video has no audio. The Professor begins by displaying several topics discussed in the previous lecture (namely, bond selling prices). The slides displayed illustrate the difference between selling a bond at its "normal" price (face / par value), selling a bond at a discount (below its face value), and selling a bond at a premium (above its face value). The Professor also goes over an example to further emphasize the difference in bond selling prices. Following completion of the problem, the Professor begins showing the journal entries involved in recording the issuance of bonds [at different selling prices]. When bonds are issued at maturity (par value), it simply involves a debit to the cash account and a credit to the bonds payable account, and then the semi-annual payment of interest (which involves a debit to interest expense and a credit to cash). A problem is completed to further illustrate this. When bonds are sold at a discount, the journal entries are a bit more complicated. While it still involves a debit to cash and a credit to bonds payable, a "discount to bonds payable" account should also be debited for the difference between the actual cash received and the face value of the bond. For example, if you sell a $1000 bond for $900, you would debit cash for $900 (the actual cash you receive), credit bonds payable for $1000 (the face value of the bond), and then debit discount to bonds payable for $100 (the difference between the face value and the price the bond was sold at. A problem (with solutions) is displayed covering this. The journal entries involved with issuing bonds at a premium can be thought of as the "opposite" of issuing at a discount. Again, a debit to cash and a credit to bonds payable is required, as well as a credit to the new "premium on bonds payable" account. For example, if a bond with a $1000 face value is sold for $1100, you would debit cash for $1100 (actual amount of cash received), credit bonds payable for $1000 (face value of the bond) and credit premium on bonds payable for $100 (the different between the amount of cash received and the face value of the bond). ------QUICK NAVIGATION------ Bond Price (Selling Price): 0:25 Bond Prices: 7:08 Exercise S11-4 - Pricing Bonds: 10:10 Exercise S11-4 Solutions Review: 13:55 Issuing Bonds Payable at Maturity (Par) Value: 19:51 Exercise S11-5 - Journalizing Bond Transactions: 24:30 Exercise S11-5 Solution Review: 27:45 Issuing Bonds Payable at a Discount: 30:15 Exercise S11-7: Journalizing Bond Transactions - 55:54 Exercise S11-7 Solution Review: 1:03:03 Issuing Bonds Payable at a Premium: 1:07:27 To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html
How to Calculate the Issue Price of a Bond (Semiannual Interest Payments)
 
04:46
This video shows how to calculate the issue price of a bond that pays semiannual interest. The issue price is the sum of: (1) the present value of the face value of the bond, which is to be paid when the bond matures, and (2) the present value of the interest payments. Because the bond pays interest semiannually, the interest rate should be divided by two and the number of periods should be adjusted (e.g., if it is a 10-year bond, there would be 20 periods because interest is paid twice a year). The video provide formulas to calculate the present values and illustrates the computations using an example. 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: 24668 Edspira
Bond Issued With Stock Warrants (Allocating Proceeds Received Using The Proportional Method)
 
09:31
Accounting for bonds issued with stock warrants, using the proportional method to allocate the proceeds between the bond and the stock warrant, Detachable Warrant can be separated from the security & traded as a separate security, by purchasing a warrant the buyer receives the right to buy Stock (equity) at a fixed price in the future, Allocate proceeds from the sale of Bonds (debt) with the attached Warrant between the two securities using the Proportional Method, Proportional Method: Fair value of all securities is known, allocate proceeds received proportionately between the securities, example Corp-A issued 4,000 of $1,000 Bonds at 101 (101% par), each Bond was issued with (1) detachable Stock Warrant,1-After issuing Bonds were selling at 98 (98% of par) without warrant, the Warrants had a market value of $40 ea, Bonds & Warrants each could be sold separately, 2-Use Proportional Method to issue Bond with Warrant, detailed accounting by Allen Mursau
Views: 2095 Allen Mursau