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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: 25927 Edspira
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: 22412 Roger CPA Review
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: 11568 Kristin Ingram
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: 72256 Edspira
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: 115706 Edspira
Bonds Straight Line Amortization
 
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This video shows how we use the straight line amortization method to record interest expense for both a discount and a premium.
Views: 32211 mattfisher64
Bonds Payable Entries
 
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Entries for issuing bonds at par, a premium, a discount, between interest dates as well as redemption of the bonds
Views: 46 Marianne M. Rexer
Accounting Lecture 14 - Gains and Losses from Bond Retirements
 
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From the free study guides and course manuals at www.my-accounting-tutor.com. Recording gains and losses from the early redemption of callable bonds.
Views: 25584 Craig Pence
Basic journal entries related to zero-interest-bearing bonds
 
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This video goes over basic calculations and journal entries related to deep-discount or zero-interest-bearing notes/bonds.
Views: 184 Nadia Schwartz
Bonds redemption journal entries.
 
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Video on basic bond redemption.
Views: 4012 Nadia Schwartz
Bonds Payable - Accounting Basic Training
 
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Tutorials to help you through your introduction to accounting class.
Views: 1234 Linda Rutz
Issuance of Bonds Journal Entry - Lesson 3
 
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In the video, 11.03 - Issuance of Bonds Journal Entry – Lesson 3, Roger Philipp, CPA, CGMA, gives a full demonstration of the inner workings of the effective interest method for amortizing bond discount or bond premium. Working through the $1 million 10% yield, 8% coupon bond example, Roger first reviews the 5-step journal entry at issuance described in Lessons 1 and 2. Then he provides the steps for the effective interest method with a bond discount and then explains the steps for a bond premium, explaining the concepts and journal entries along the way. You will also learn to use the effective interest rate to calculate interest expense, and the coupon rate to calculate the cash payment, which is always the same. Interest expense changes with each coupon payment. As carrying value increases with a discount bond, interest expense increases. As carrying value decreases with a premium bond, interest expense decreases. Over the term of a discount bond the discount will be amortized until the carrying value is increased up to the face value of the bond. Over the term of a premium bond the premium will be amortized until the carrying value is decreased to the face value of the bond. Over the terms of both discount and premium bonds, the amortization amount of either the discount or premium increases over the life of the bond. Roger’s table and demonstration make these concepts and relationships very clear. 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: Let’s go through, and what we're going to do, is we're going to go through and do our example that we did earlier, which is five year term bond, a million dollars, and we'll go through doing both of these discounted premiums. So the way percent stated, issued at 10. Eight percent stated, issued at six. And then we'll go through, and do the effective interest table. Now, my numbers aren't going to be exact, because I kind of want to make it a little bit easier for me to get through the calculations. But you'll see how it works. So we're going to set up our amortization table, which has the face, plus or minus, and we're going to have plus or minus our premium, or discount, that equals your carrying value. Times, the effective interest rate.
Views: 6475 Roger CPA Review
Bonds and Notes Payable
 
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bonds notes accounting matt fisher
Views: 27696 mattfisher64
Adjusting Entries for Bonds Payable
 
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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=TmJ0PGGSnSI To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html
Journal Entries of Zero Coupon Bonds
 
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Zero coupon bonds are the famous type of bonds in which the company will gives only face value without paying any extra discount. Investor gets earning buy getting the zero coupon bonds at discount. This discount will be the income of investor and second side, company has to show it as interest which not in cash but it is the part of face value of zero coupon bonds. In above video, I have explained journal entries of zero coupon bonds.
Views: 1755 Svtuition
Accounting: Bonds (Part I)
 
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Copyright by Brian R. Lazarus. Check out this website: http://www.lazarusbusinesssolutions.com for other related video lectures.
Views: 37028 profblazarus
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: 28734 Roger CPA Review
9.8 Bonds Payable Accounting Entries Part 1
 
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Bonds Payable Accounting Entries Part 1
Views: 1361 Dee Amaradasa
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
Accounting Lecture 16 - Bond Issuance/Purchase With Accrued Interest
 
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From the free study guides and course manuals at www.my-accounting-tutor.com. Accounting for the sale and purchase of bonds between interest payment dates. Bonds are sold or purchased with accrued interest.
Views: 13759 Craig Pence
Examples BE 16-1 & BE 16-2: Convertible Bonds | Intermediate Accounting | CPA Exam FAR
 
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Stock options, convertible securities, convertible preferred stock, conversion feature, book value method, fair value, induced conversion, convertible debt
Early redemption of bonds
 
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Calculate gain or loss on early redemption of bonds
Views: 5238 Cheri Bergeron
Bonds Effective Interest Method - Discount
 
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This video explains how to calculate a bond that sells at a discount. It shows the corresponding journal entries on the original sale and interest payments. It also shows how to prepare the amortization table and explains what the numbers represent.
Views: 29338 mattfisher64
Discount and Premium Amortization on Bonds
 
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http://www.accounting101.org An example problem on discount and premium amortization on bonds.
Views: 18681 SuperfastCPA
Bond Retirement
 
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In the video, 11.04 - Bond Retirement, Roger Philipp, CPA, CGMA, sets up the journal entry to retire a bond by first reviewing the initial issuance journal entry, then turning it around into a bond retirement journal entry. He discusses, Debit Bonds Payable, debit any unamortized premium or credit any unamortized discount, credit any unamortized bond issue costs and credit Cash for the amount paid to retire the bond. Please note that the plug will be the gain or loss. If the plug is a debit, it’s a loss on bond retirement; if the plug is a credit, it’s a gain on bond retirement. Roger also briefly covers bond sinking funds in this lesson. In the next lesson, it will be time to apply all this bond knowledge to working through questions! 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: All right, let's talk about bond retirement. So, we've talked about issuing a bond. And, remember issuing a bond. Credit bonds payable, accrued interest, cash, boom, boom. This is BIC, this is discount or premium. Now, early retirement of bonds. So what this says is, the bond may be called, it may be retired prior to once it matures. In other words, it's a five year bond, but two years in, they call it back. Basically, it's the opposite of the entry we just did. So, as we look through this, it's the opposite of the journal entry.
Views: 13474 Roger CPA Review
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
Convertible Bonds Using Book Value Method, Accounting Complete Calculations & J/E's
 
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Convertible bonds (debt for equity swap), accounting using the book value method to convert bonds into common stock, originally issued convertible bonds, bondholders are holding the bonds, exchange at least a portion of the bonds for common stock, bondholders return that portion back to the company in exchange for common stock, complete calculations for accounting required for the bond exchange, premium (discount) versus bond carrying value, number bonds converted versus shares common stock issued (decreases liabilities while increasing equity), balance sheet journal entries (T accounts) shown on balance sheet template, bonds payable, bond premium (discount), common stock, APIC (additional paid in capital), accounting detailed and explained by Allen Mursau
Views: 10706 Allen Mursau
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: 36431 Notepirate
Accounting - Bond Initial Journal Entries - Severson
 
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See the below link for more resources, including as a list of all of my videos, practice exercises, Excel templates, and study notes. https://www.dropbox.com/s/09hdhag3zieyt08/Severson%20YouTube%20Videos.xlsx?dl=0 This lecture discussed the initial bond entries needed to record the bond issuance at premium, discount, or par. Future lectures will cover the topics of interest amortization and eventually the payoff of the bonds.
Contra Account How It Works By Example (Discount Bonds Payable)
 
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How a contra account is used (works opposite) demonstrated by (Discount to Bonds Payable), used as a balancing account between the asset account (cash received when issuing a bond) and liability account (Bonds Payable, face value), less cash received when issuing the bond than liability recorded, the contra account is used to balance the equation (assets = liabilities), also the contra account is used to amortize the bond interest expense over the life of the bond, demonstrated thru balance sheet (T Account) and income statement journal entries, also included is a listing of common contra accounts, (1) asset types as allowance for bad debt, valuation allowance, accummulated depreciation, discount notes receivable, discount bonds receivable, accummulated depletion,accummulated amortization, (2) liability types, discount notes payable, discount bonds payable, (3) revenue types, sales discounts, sales returns and allowances, (4) expense types, purchase discounts, purchase returns and allowances, explaination by Allen Mursau
Views: 10089 Allen Mursau
Intermediate Accounting 6E Bonds with Detachable Warrants
 
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Ken Boyd is the owner of St. Louis Test Preparation (www.stltest.net). He provides tutoring in accounting and finance to both graduate and undergraduate students. Ken is the author of Cost Accounting for Dummies (Available in March of 2013). As a former CPA, Auditor, Tax Preparer and College Professor, Boyd brings a wealth of business experience to education.
Views: 5143 AccountingED
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: 579 Foundation2Know
Issuance of Bonds Journal Entry - Lesson 2
 
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Continuing from the 5-step journal entry for bond issuance, from the issuer’s point of view, Roger Philipp, CPA, CGMA, explains in the video, 11.03 - Issuance of Bonds Journal Entry – Lesson 2, how to calculate the bond carrying value, also known as amortized cost. Amortized cost is the face amount of the bond, net of either the premium or discount. Remember to exclude from the bond carrying amount any accrued interest or bond issue costs (BIC), both of which may be found in the journal entry at issuance. Please note that if the issuance involved BIC or accrued interest, cash proceeds from the bond issue will not equal the initial carrying value of the bond. Roger goes on to explain the difference between ‘recording’ and ‘reporting’ bonds – a key distinction for the CPA Exam, where bonds tend to get heavily tested. Lastly, Roger sets the stage for the upcoming in-depth review of the effective interest method for amortizing bond discounts and premiums. 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, when we talk about the carrying value of the bonds, what is the carrying value of the bonds? It is going to be the face of the bonds, net of either premium, or net of discount. That is called the carrying value of the bonds. It is also known as your "amortized cost." Remember earlier, we had bonds payable was a million, and I said the discount was 100, so this net of this is what, 900. What do we do every year? This gets smaller, carrying value gets bigger bigger, bigger, bigger up to a million bucks. What if it's a premium, then this would be the million, the premium would be the hundred, this would be the carrying value or amortized cost, a million one, gets smaller, smaller, smaller to a million.
Views: 6139 Roger CPA Review
Chap 15 Lecture: Bonds Payable
 
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This presentation covers long-term liabilities including determining the selling price of a bond, terminology regarding interest rates (contract, coupon, stated, effective, market), and journal entries for issuing the bond at face, premium, and discount. The follow-up video covers amortization concepts (straight-line, effective interest method).
Views: 39206 oruaccounting
ProfessorBDoug's Bond Discount Journal Entry
 
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We walk through a journal entry for a bond discount problem.
Views: 6556 ProfessorBDoug
Accounting for Bonds Payable (Straight-Line Amortization) Part 1
 
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Covers what is a bond, some bond terminology, and what it means for a bond to sell at par, a discount, or premium.
Views: 29919 ProfJakovich
Excel Finance Class 53: Bond Discount Or Premium Journal Entries
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Learn how to record Bond Discount Or Premium Journal Entries.
Views: 5250 ExcelIsFun
Intermediate Accounting 13/ Convertible Bonds
 
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Ken Boyd, owner of St. Louis Test Preparation (www.stltest.net) presents part 13 of his course on Understanding Intermediate Accounting. Boyd points out that students can have success with Intermediate Accounting concepts by making connections to actual examples from business. As a former CPA, College Accounting professor and Auditor, Ken has a wealth of experience to bring to the subject.
Views: 13768 AccountingED
Bond Amortization Schedule Effective Interest Rate Method Accounting (Bond Discount)
 
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How to amortize a bond issued at a discount (present value less than face value of bond) using the effective interest rate method, 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 the discount amount on the bond (amount the PV is less than its face value), the discount amount has to be amortized over the life of the bond using an amortization schedule, detailed example showing how to setup amortization schedule and use the schedule to amortize the bond discount, detailed calculations with accounting journal entries (T accounts)on balance sheet template for bond payable, discount on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment - interest expense), add amortized discount to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed calculations and accounting by Allen Mursau
Views: 52844 Allen Mursau
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: 35175 Allen Mursau
Bonds Effective Interest Premium Amortization
 
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This video goes through the calculation of a bond premium and then prepares a spreadsheet showing the amortization of the premium. Finally it shows the corresponding journal entries. To see all my video links, look at my playlists at my channel: mattfisher64.
Views: 9964 mattfisher64