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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: 25766 Roger CPA Review
Bond Issued At Premium Or Discount Deterimed By Bonds Present Value Of Cash Flows
 
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How to calculate the bond premium or bond discount based on the present value of a bond (issued) for both a bond issued at a discount and a bond 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 annuity type payments) 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 or premium amount on the bond, both cases (bond premium versus bond discount) are demonstrated and calculated based on a cash flow diagram which includes the bonds future value (face value, maturity value) and interest payment amounts, using Excel present value function the cash flows are discounted back using the market rate of interest to determine a discount or premium amount on the bond (discount PV is less than face value while premium PV greater than face value of bond), must determine bond discount or premium for amortization of the bond used in accounting, detailed example by Allen Mursau
Views: 9740 Allen Mursau
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: 101409 Edspira
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: 33431 Allen Mursau
Bond Effective Interest Rate Defined, Calculated And Applied Bond Cash Flow flow
 
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How to calculate the effective interest (example for bond effective interest rate) and apply the effective interest rate to amortize a bond (could be for other types of investments as well), the effective interest rate is the rate of interest required to discount a cash flow (bond example) of future value of bond and its payments back to its present value at time its issued, once the effective interest rate is calculated it can be used to amortize the bond using the effective interest rate method, detailed example showing a cash flow diagram and using Excel IRR (internal rate of return) function to calculate the effective interest rate, using the interest rate a bond amortization schedule (how to apply effective interest rate) is shown based on the bond purchase price, face value, yeild to maturity, coupon rate and effective interest rate, complete accounting example with detailed calculations including basic journal entries for a bond amortization by Allen Mursau
Views: 3702 Allen Mursau
Excel Finance Class 57: Compare Cash Flows For a Coupon & A Zero Coupon Bond
 
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Download Excel workbook http://people.highline.edu/mgirvin/ExcelIsFun.htm Compare Cash Flows For a Coupon & A Zero Coupon Bond and see why some prefer one over the other.
Views: 5614 ExcelIsFun
Calculating Bond Issuance Proceeds
 
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What it the present value of a bond at issuance? Watch Roger Philipp, CPA, CGMA, use ‘present value’ as a verb as he explains the answer to the question in the video, 11.01 - Calculating Bond Issuance Proceeds. The face value of the bond is a lump sum, the coupon interest is an annuity. These are summed to find the present value of a bond at issuance. Use the effective interest rate to present value both the lump sum and the annuity! But is it an annuity due or an ordinary annuity due also known as annuity in arrears? In typical joking Roger fashion, Roger helpfully pats his own backside in order to demonstrate that an annuity in arrears is paid at the end of the year, which is the case with bond interest. Roger then shows how to handle the present value factor of an annuity for a bond that pays interest semi-annually instead of annually. What if the CPA Exam simply states a bond was issued at 101, or at 98? Roger explains what those numbers mean and how to calculate the bond issuance proceeds given only that information. 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, how do you figure out how much to charge? How much cash should I charge you? How much cash should I charge you? How much cash should I charge you? Basically we're going to try to figure out what the carrying value or the amortized cost should be. In this case it’s a thousand net of a 100 is 900 which happens to be the cash. Here it happens to be a thousand which is a thousand. Here it happens to be a million one which is this plus this. Okay, there could be other factors that fall into that but we've got to figure out, okay, how much should the present value of the bonds be? When you’re present valuing the bonds, there are two things we need to present value. We need to present value the face and we need to present value the interest.
Views: 14538 Roger CPA Review
CFA Level I Non current liabilities (bonds) Video Lecture by Mr. Arif Irfanullah
 
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This CFA Level I video covers concepts related to: • Long Term Liability • Bond and Bond Terminology • Market Rate vs. Coupon Rate • Bond Issued at Par • Bond Issued at Discount • Bond Issued at Premium • Cash Flow Treatment • Zero Coupon Bond • Issuance Cost • Amortization Methods • Recognition of Debt • Debt Covenants • Presentation and Disclosure of Long Term Debt For more updated CFA videos, Please visit www.arifirfanullah.com.
Views: 36637 IFT
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: 438 Cheri Bergeron
How to Price/Value Bonds - Formula, Annual, Semi-Annual, Market Value, Accrued Interest
 
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http://www.subjectmoney.com http://www.subjectmoney.com/definitiondisplay.php?word=Bond%20Pricing In this video we show you how to calculate the value or price of a bond. We teach you the present value formula and then use examples to discount the coupon payments and principle payment to their present value. We also show you how to solve the price of a semi-annual bond. In this case you would multiply the periods by two and divide the YTM and coupon payments by 2. We also show you how to solve the accrued interest of a bond to find out what it would sell for at a date that is not on the exact coupon payment date. https://www.youtube.com/user/Subjectmoney https://www.youtube.com/watch?v=7zCqoED8MVk http://www.roofstampa.com hjttp://roofstampa.com http:/www.subjectmoney.com http://www.excelfornoobs.com
Views: 83200 Subjectmoney
Bonds & Bond Valuation | Introduction to Corporate Finance | CPA Exam BEC | CMA Exam | Chp 7 p 1
 
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When a corporation or government wishes to borrow money from the public on a long-term basis, it usually does so by issuing or selling debt securities that are generically called bonds. In this section, we describe the various features of corporate bonds and some of the terminology associated with bonds. We then discuss the cash flows associated with a bond and how bonds can be valued using our discounted cash flow procedure. BOND FEATURES AND PRICES As we mentioned in our previous chapter, a bond is normally an interest-only loan, meaning that the borrower will pay the interest every period, but none of the principal will be repaid until the end of the loan. For example, suppose the Beck Corporation wants to borrow $1,000 for 30 years. The interest rate on similar debt issued by similar corporations is 12 percent. Beck will thus pay .12 × $1,000 = $120 in interest every year for 30 years. At the end of 30 years, Beck will repay the $1,000. As this example suggests, a bond is a fairly simple financing arrangement. There is, however, a rich jargon associated with bonds, so we will use this example to define some of the more important terms. In our example, the $120 regular interest payments that Beck promises to make are called the bond’s coupons. Because the coupon is constant and paid every year, the type of bond we are describing is sometimes called a level coupon bond. The amount that will be repaid at the end of the loan is called the bond’s face value, or par value. As in our example, this par value is usually $1,000 for corporate bonds, and a bond that sells for its par value is called a par value bond. Government bonds frequently have much larger face, or par, values. Finally, the annual coupon divided by the face value is called the coupon rate on the bond; in this case, because $120/1,000 = 12%, the bond has a 12 percent coupon rate. The number of years until the face value is paid is called the bond’s time to maturity. A corporate bond will frequently have a maturity of 30 years when it is originally issued, but this varies. Once the bond has been issued, the number of years to maturity declines as time goes by. BOND VALUES AND YIELDS As time passes, interest rates change in the marketplace. The cash flows from a bond, however, stay the same. As a result, the value of the bond will fluctuate. When interest rates rise, the present value of the bond’s remaining cash flows declines, and the bond is worth less. When interest rates fall, the bond is worth more. To determine the value of a bond at a particular point in time, we need to know the number of periods remaining until maturity, the face value, the coupon, and the market interest rate for bonds with similar features. This interest rate required in the market on a bond is called the bond’s yield to maturity (YTM). This rate is sometimes called the bond’s yield for short. Given all this information, we can calculate the present value of the cash flows as an estimate of the bond’s current market value.
Understanding "expected" cash flows from a bond
 
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Takes a look at three different bonds - Alibaba, Citigroup, and CVS Health Corp - to discuss the expected cash flows from each as on January 6, 2018.
Views: 32 S Roy
Issuing Bonds at a Discount
 
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Issuing Bonds at a Discount
Views: 518 Rex Jacobsen
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: 50291 Allen Mursau
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
What is a Bond | by Wall Street Survivor
 
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What is a bond? Learn more at: https://www.wallstreetsurvivor.com A bond is a debt investment in which an investor loans money to a corporate entity or government. The funds are borrowed for a defined period of time at either a variable or fixed interest rate. If you want a guaranteed money-maker, bonds are a much safer option than most. There are many times of bonds, however, and each type has a different risk level. Unlike stocks, which are equity instruments, bonds are debt instruments. When bonds are first issued by the company, the investor/lender typically gives the company $1,000 and the company promises to pay the investor/lender a certain interest rate every year (called the Coupon Rate), AND, repay the $1,000 loan when the bond matures (called the Maturity Date). For example, GE could issue a 30 year bond with a 5% coupon. The investor/lender gives GE $1,000 and every year the lender receives $50 from GE, and at the end of 30 years the investor/ lender gets his $1,000 back. Bonds di er from stocks in that they have a stated earnings rate and will provide a regular cash flow, in the form of the coupon payments to the bondholders. This cash flow contributes to the value and price of the bond and affects the true yield (earnings rate) bondholders receive. There are no such promises associated with common stock ownership. After a bond has been issued directly by the company, the bond then trades on the exchanges. As supply and demand forces start to take effect the price of the bond changes from its initial $1,000 face value. On the date the GE bond was issued, a 5% return was acceptable given the risk of GE. But if interest rates go up and that 5% return becomes unacceptable, the price of the GE bond will drop below $1,000 so that the effective yield will be higher than the 5% Coupon Rate. Conversely, if interest rates in general go down, then that 5% GE Coupon Rate starts looking attractive and investors will bid the price of the bond back above $1,000. When a bond trades above its face value it is said to be trading at a premium; when a bond trades below its face value it is said to be trading at a discount. Understanding the difference between your coupon payments and the true yield of a bond is critical if you ever trade bonds. Confused? Don't worry check out the video and head over to http://courses.wallstreetsurvivor.com/invest-smarter/
Views: 124716 Wall Street Survivor
Bond Cash Flows and Fully Amortizing Loans
 
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This video is part of a BlueBook Academy course: Introduction to Fixed Income Securities. BlueBook Academy is an online finance school to get people job ready, without debt and then help them find jobs. Start on a learning path, a selection of hand-picked certificates, designed to give you the essentials you need to land your dream job. Study towards exams and increase your chances of success with free tutorials, quizzes and extra learning resources. Or start on a specific course and earn an accredited certificate to add to your LinkedIn profile and CV. BlueBook Academy students have successfully landed their dream jobs at Accenture, Morgan Stanley, Citigroup, KPMG and many more. We've been featured at the QS-Wharton Reimagine Education Awards and the UK National Undergraduate Employability Awards. Learn for free - get certified - land your dream job. Join our fast growing community of learners at bluebookacademy.com
Views: 270 BlueBookAcademy.com
Bond Issued At Premium Affect On Bond Interest Expense Recognized (Income Statement)
 
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Examine how bond issued (purchased) at a premium affects recognized interest expense on Income Statement, bond issued at a premium (price received for bond is greater than face value of bond the difference is the premium amount) includes two different interest components, (1) regular stated rate of interest payment plus (2) less amortized amount of premium on the bond for each period, example demonstrates the accounting required for a discounted bond premium shown on a balance sheet template, bonds payable, premium bonds payable, interest payable, and interest expense, cash flow diagram details the cash flows calculating the interest expense that has to be amortized over the life of the bond and subtracted to the regular interest payments which decreases the interest expense recognized on the income statement, accounting detailed thru (Taccounts) on the balance sheet by Allen Mursau
Views: 1441 Allen Mursau
Cash Flows Statement under Direct Method | Statement of Cash Flows | Financial Statement |Accounting
 
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What is Cash Flow Statement? Cash Flow Statement is a statement which reports • cash receipts, • cash payments, and • net change in cash. A statement of cash flows indicates: • where the company’s cash comes from and • how the company uses its cash. Cash Flow Statement shows cash flows from: • Operating activities, • Investing activities, and • Financing activities. What are the usefulness of Cash Flow Statement? Cash Flow Statement is prepared with a view to: 1. Knowing the entity’s ability in generating future cash flows 2. Knowing the entity’s ability to pay dividends 3. Knowing the entity’s ability to meet obligations 4. Identifying the reasons for the difference between net income and net cash flow from operating activities. 5. Knowing the amount of assets increased or decreased during the period by investing activities 6. Knowing the amount of liabilities increased or decreased during the period by financing activities Classification of cash flows: 1. Operating activities involve income statement items. 2. Investing activities involve cash flows resulting from changes in investments and long-term asset items. 3. Financing activities involve cash flows resulting from changes in long-term liability and stockholders’ equity items. Three sources of information to prepare cash flow statement: 1. Comparative balance sheets (two years balance sheet) 2. Current year income statement data 3. Additional detailed information (to determine how the company provided or used cash during the period) Non-Cash Items which should not be included in cash flow statement: 1. Direct issuance of common stock to purchase assets. 2. Conversion of bonds into common stock. 3. Direct issuance of debt to purchase assets. 4. Exchanges of plant assets. The above non-cash items are reported separately at the bottom of the statement of cash flows. The sum of the operating, investing, and financing sections equals the net increase or decrease in cash for the period. This amount is added to the beginning cash balance to arrive at the ending cash balance—the same amount reported on the balance sheet. To calculate cash flows from operating activities, we need to analyze the current year's income statement as well as current assets and liabilities from comparative balance sheets and selected additional data. To calculate cash flows from investing activities, we need to analyze the Long Term Assets items from the comparative balance sheet and selected additional data. To calculate cash flows from financing activities, we need to analyze the Equity items from the comparative balance sheet and selected additional data. Indirect and Direct Methods In order to calculate CASH FLOWS FROM OPERATING ACTIVITIES, a company must convert net income from an accrual basis to a cash basis. This conversion may be done by either of two methods: (1) Indirect method or (2) Direct method. Both methods arrive at the same total amount for “Net cash provided by operating activities.” They differ in how they arrive at the amount. The indirect method adjusts net income for items that do not affect cash. The direct method shows operating cash receipts and payments, making it more consistent with the objective of a statement of cash flows. So, in this tutorial we will learn how to prepare Cash Flow Statement under direct method. Under the direct method, companies compute net cash provided by operating activities by adjusting each item in the income statement from the accrual basis to the cash basis.
Views: 17650 Md. Azim
Bond Issued Between Payment Dates Amortization Schedule With Detailed Calculations
 
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How to calculate accounting required for a bond issued (sold) between regular interest payment dates, detailed example based on the effective interest method, example accounts for interest payment and amortized permium (discount) for the period between payment dates based on calculating present and future values of the carrying value of the bond between periods, detail calculations with cash flow diagrams and bond amorization schedule, calculate the bonds fair value at the next payment date and discount it back to issue date (incude interest portion), calculates interest payment at stated interest rate, interest expense market rate, difference equals amortized premium or discount which reduces (increases) bond carrying value, based on bond amortization schedule, accounting journal entries are included, detailed accounting by Allen Mursau
Views: 319 Allen Mursau
Bond Issued at Discount
 
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Bond Issued at Discount
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: 423 Foundation2Know
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: 31362 Notepirate
Bond Issued At Premium Accounting Detailed With Balance Sheet Journal Entries
 
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How to record a bond issued at a premium on the balance sheet and income statement, detailed journal entries (T account form), amortize a bond issued at a premium (present value greater 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 premium amount on the bond (amount the PV is greater than its face value), the premium 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 premium, detailed calculations with accounting journal entries (T accounts)on balance sheet template for bond payable, premium on bond payable, interest payments, interest expense (market rate x carrying value of bond), amortized interest expense (interest payment - interest expense),subtract amortized premium to the bonds carrying value to determine the bonds new carrying value (bond amortization), detailed calculations and accounting by Allen Mursau
Views: 6590 Allen Mursau
Cash Flow Statement (Basic Overview Of Financing Activities As Liabilities & Stockholders Equity)
 
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Accounting cash flow for financing activities (cash flow statement) basic overview, cash flow involving liabilities & stockholders equity (determine the change in cash), note that investments in stocks & bonds as AFS & HTM are held as assets & are investing activities & are not included in financing activities, the financing activity includes (1) long term liabilities (as debt) such as bonds payable, here you look at bonds issued vs bonds redeemed & interest payable on the bonds to determine if cash is provided or used, (2) (contributed capital) for stocks issued for cash vs stocks exchanged for investment in another company or for an asset (noncash exchange), must consider treasury stock buyback, (3) (earned capital), cash is concerned with dividends declared as a reduction to retained earnings, dividends declared as dividends payable vs a reduction to dividends payable which affects cash, discussion overview of cash flow by Allen Mursau
Views: 1552 Allen Mursau
Zero Coupon Bond Issued At Discount Amortization And Accounting Journal Entries
 
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Accounting for a zero coupon bond issued at a discount (issue price less than face value) interest calculation and balance sheet recording, start with a cash flow diagram, face (maturity) value, no stated rate of interest on bond and no interest payments (usually semi-annual), discount the face (maturity) value using the market rate of interest to the issue (purchase) date to determine its present value (purchase price) the difference between the face value (FV) and its present value (PV) equals the discounted amount which equals the profit or expense, the discounted amount has to be amortized to determine the interest payable (receivable) and interest expense (revenue) recognized, the amortization schedule is calculated as (market rate of interest x beginning carrying value = amortized interest, add to beginning carrying value to determine new carrying (book) value, detailed calculations with balance sheet journal entries for bond payable (receivable), discount bond payable (receivable), interest expense (revenue), etc., by Allen Mursau
Views: 5140 Allen Mursau
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: 2223 Accounting Videos
Cash Flow From Financing Activities (Formula & Example) | Calculation
 
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In this video we are going to discuss Cash flow from Financing Activities in detail. Including some examples and calculation. 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐅𝐫𝐨𝐦 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬 -------------------------------------------------------------- This reports the issuance and repurchase of the firm's own bonds and stock itself and also the payment of dividends. It also reports the transactions of capital structure. 𝐈𝐭𝐞𝐦𝐬 𝐢𝐧 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐟𝐫𝐨𝐦 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬 ------------------------------------------------------------------------------- 1. Reduction in short-term borrowings (cash outflow) 2. Sales of Shares (cash inflows) 3. Repurchase of shares 4. Expansion in short-term borrowings 5. Cash dividend paid (cash outflow) 6. Repay of long-term borrowings (cash outflow) To know more about 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐅𝐫𝐨𝐦 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐧𝐠 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/cash-flow-financing-activities/
Views: 108 WallStreetMojo
Bond Issued At Discount Affect On Bond Interest Expense Recognized (Income Statement)
 
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Examine how bond issued (purchased) at a discount affects recognized interest expense on Income Statement , bond issued at a discount (price received for bond is less than face value of bond the difference is the discounted amount) includes two different interest components, (1) regular stated rate of interest payment plus (2) amortized amount of discount on the bond for each period, example demonstrates the accounting required for a discounted bond shown on a balance sheet template, bonds payable, discount bonds payable (contra account), interest payable, and interest expense, cash flow diagram details the cash flows calculating the additional interest expense that has to be amortized over the life of the bond and added to the regular interest payments which increases the interest expense recognized on the income statement, accounting detailed thru (Taccounts) on the balance sheet by Allen Mursau
Views: 2552 Allen Mursau
Statement of Cash Flows | Intermediate Accounting | CPA Exam FAR | Chp 5 p 2
 
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cash flow statement tutorial, cash flow statement explained, cash flow statement analysis, cash flow statement direct method, how to prepare cash flow statement, cash flow statement direct vs indirect, cash flow statement direct vs indirect, Cash flow statement FAR, Financial Accounting Reporting,FAR,FAR CPA Review,FAR CPA Exam,FAR CPA Lectures, Roger CPA FAR,CPA Exam FAR Tips, ,how to pass the CPA exam,how to study for the cpa exam,becker,cpa exam,cpa, CPA exam Tutor,CPA exam Tutoring, video, FAR video, Free FAR video The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Classification of Cash Flows 3. The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include all transactions and events that are not investing and financing activities. Operating activities include the cash effects of transactions that enter into the determination of net income, such as cash receipts from sales of goods and services, and cash payments to suppliers and employees for acquisitions of inventory and expenses. Operating activities involve income determination items. 4. Investing activities include (a) making and collecting loans, and (b) acquiring and disposing of investments and productive long-lived assets. Investing activities involve cash flows generally resulting from changes in long-term asset items. 5. Financing activities involve liability and stockholders’ equity items and include (a) obtaining cash from creditors and repaying the amounts borrowed, and (b) obtaining capital from owners and providing them with a return on, and return of, their investment. Financing activities involve cash flows generally resulting from changes in long-term liability and stockholders’ equity items. 6. The typical cash receipts and cash payments of a business entity classified according to operating, investing, and financing activities are shown below. Operating Activities Cash inflows From sales of goods or services. From returns on loans (interest) and on equity securities (dividends). Cash outflows To suppliers for inventory. To employees for services. To government for taxes. To lenders for interest. To others for expenses. Investing Activities Cash inflows From sale of property, plant, and equipment. From sale of debt or equity securities of other entities. From collection of principal on loans to other entities. Cash outflows To purchase property, plant, and equipment. To purchase debt or equity securities of other entities. To make loans to other entities. Financing Activities Cash inflows From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows To stockholders as dividends. To redeem long-term debt or reacquire capital stock.
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: 8172 FacebookMarketingCom
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: 11841 Roger CPA Review
Overview & Purpose of Statement of Cash Flows | Intermediate Accounting | CPA Exam FAR | Chp 23 p 1
 
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cash flow statement tutorial, cash flow statement explained, cash flow statement analysis, cash flow statement direct method, how to prepare cash flow statement, cash flow statement direct vs indirect, cash flow statement direct vs indirect, Cash flow statement FAR, Financial Accounting Reporting,FAR,FAR CPA Review,FAR CPA Exam,FAR CPA Lectures, Roger CPA FAR,CPA Exam FAR Tips, ,how to pass the CPA exam,how to study for the cpa exam,becker,cpa exam,cpa, CPA exam Tutor,CPA exam Tutoring, video, FAR video, Free FAR video The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Classification of Cash Flows 3. The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include all transactions and events that are not investing and financing activities. Operating activities include the cash effects of transactions that enter into the determination of net income, such as cash receipts from sales of goods and services, and cash payments to suppliers and employees for acquisitions of inventory and expenses. Operating activities involve income determination items. 4. Investing activities include (a) making and collecting loans, and (b) acquiring and disposing of investments and productive long-lived assets. Investing activities involve cash flows generally resulting from changes in long-term asset items. 5. Financing activities involve liability and stockholders’ equity items and include (a) obtaining cash from creditors and repaying the amounts borrowed, and (b) obtaining capital from owners and providing them with a return on, and return of, their investment. Financing activities involve cash flows generally resulting from changes in long-term liability and stockholders’ equity items. 6. The typical cash receipts and cash payments of a business entity classified according to operating, investing, and financing activities are shown below. Operating Activities Cash inflows From sales of goods or services. From returns on loans (interest) and on equity securities (dividends). Cash outflows To suppliers for inventory. To employees for services. To government for taxes. To lenders for interest. To others for expenses. Investing Activities Cash inflows From sale of property, plant, and equipment. From sale of debt or equity securities of other entities. From collection of principal on loans to other entities. Cash outflows To purchase property, plant, and equipment. To purchase debt or equity securities of other entities. To make loans to other entities. Financing Activities Cash inflows From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows To stockholders as dividends. To redeem long-term debt or reacquire capital stock.
bonds cash flow 2
 
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Views: 49 Yashpreet Singh
Bond Issued Between Interest Dates Calculations And Amortization With Journal Entries
 
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How to calculate and record a bond issued (sold) between regular interest payment dates, detailed example with accounting journal entries based on the effective interest method, example accounts for interest payment and amortized premium (discount) for the period between payment dates based on calculating present and future values of the carrying value of the bond between periods, detail calculations with cash flow diagrams and bond amorization schedule, calculate the bonds fair value at the next payment date and discount it back to issue date (incude interest portion), calculates interest payment at stated interest rate, interest expense market rate, difference equals amortized premium or discount which reduces (increases) bond carrying value, based on bond amortization schedule accounting balance sheet and income statement journal entries are recorded and shown for cash account, bond payable, premium or discount, interest payable and interest expense realized, detailed accounting by Allen Mursau
Views: 6002 Allen Mursau
Bond Pricing, Valuation, Formulas, and Functions in Excel
 
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Premium Course: https://www.teachexcel.com/premium-courses/68/idiot-proof-forms-in-excel?src=youtube Excel Forum: https://www.teachexcel.com/talk/microsoft-office?src=yt Excel Tutorials: https://www.teachexcel.com/src=yt This tutorial will show you how to calculate bond pricing and valuation in excel. This teaches you how to do so through using the NPER() PMT() FV() RATE() and PV() functions and formulas in excel. To follow along with this tutorial and download the spreadsheet used and or to get free excel macros, keyboard shortcuts, and forums, go to: http://www.TeachMsOffice.com
Views: 176420 TeachExcel
Effective Interest Bond Discount Amortization in Excel
 
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Effective interest bond discount amortization in Excel will calculate the amortization of a bond discount using the effective method. A bond discount results when bonds are issued for less then the face amount on the bond resulting in a journal entry that will debit cash, credit bonds payable, and credit discount. We will then need to decrease the discount during the life of the bond. We will reduce the discount to interest expense during the bond life. We can use either a straight line method or the effective method to amortize the discount. The straight line method is not the preferred accrual accounting method because it does not apply the matching principle as well as the effective method. The effective method is more complex, however. For more accounting information see accounting website. http://accountinginstruction.info/
Module 11, Video 1 - Statement of Cash Flows
 
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Go to: http://www.accountingworkbook.com/ to download the problems. Module 11 examines the statement of cash flows. This is one of the most complex topics of an introductory accounting class, we learn to classify cash flows as operating, investing, or financing, and we learn how changes in asset, liability, and equity accounts effect cash flows.
Views: 10795 Tony Bell
09 40 Bond issued on interest date at a discount
 
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Bond issued on interest date at a discount
Interest Rates on Discount Bonds
 
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I show how the bond price and the interest rate are inversely related.
Views: 8814 Mike Fladlien
1400.20 Bond Issued at Discount & Interest Payments
 
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Issue of bonds at a discount, interest payment calculation, discount amortization on a straight line method, and related journal entries.
15 - Issuing Bonds at a Discount - (Straight Line Amortization)
 
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Issuing Bonds at a Discount - Straight Line Amortization
Views: 722 AccountingBytes
Original Issue Discount (OID) on Debt Issuances
 
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In this tutorial, you'll learn what "Original Issue Discount" or OID on Debt issuances means, and how it works on the financial statements. https://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers" Table of Contents: 0:51 The Short, Simple Answer 4:04 The Longer Answer – OID on Debt with Principal Repayments 10:28 Recap and Summary Resources: https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Original-Issue-Discount-Slides.pdf https://youtube-breakingintowallstreet-com.s3.amazonaws.com/Original-Issue-Discount.xlsx SHORT ANSWER: OID comes up when a company issues Debt at a discount to par value, e.g., a bond is worth $100, but the company issues it for $90. Usually, the company does this because the bond's coupon rate (interest rate) is below the rates of other, similar bonds, and the company needs to incentivize investors to buy it. It may also happen if there are doubts about the company's credit quality and ability to eventually repay the bond. The company amortizes this discount on the financial statements and keeps increasing the Book Value of Debt on the Balance Sheet. But the company still pays Interest based on the Face Value of that Debt – the $100! So, for Debt with a Face Value of $100 at a 10% Interest Rate, issued at $90, there will be $10 in Cash Interest and $2 of OID Amortization per year. On the Income Statement, there will be $12 in Total Interest Expense, which reduces Pre-Tax Income, Taxes, and Net Income. On the Cash Flow Statement, Net Income is lower, and we add back the $2 in OID Amortization each year since it's a non-cash expense. On the Balance Sheet, the Book Value of Debt increases from $90 to $100 over time, going up by $2 per year, but the Face Value is a constant $100 (the Face Value is not shown on the BS). THE LONGER ANSWER: When there are Mandatory or Optional Repayments on the Debt, you must amortize the OID more rapidly. Companies call this "Extra Amortization" something like "Loss on Unamortized OID on Repayment," and it's based on % Debt Principal repaid in the current year * OID balance after OID Amortization in the current year. So, if the Beginning OID Balance is $10, and there's $2 OID Amortization with $20 Repayment in Year 1, it's ($20 / $100) * $8, or $1.6. The Amortization of OID itself also changes in this scenario, and it's now based on -MIN(OID Beginning Balance, OID Beginning Balance / Years Remaining in OID Amortization Period). The net effect is that instead of straight-line amortizing $2 of OID per year, we amortize a total of $4, then $3, then $2, then $1, then less than $1. On the financial statements, the "Loss on Unamortized OID on Repayment" counts as another expense on the Income Statement. Cash Interest, OID Amortization, and Loss on Unamortized OID on Repayment all reduce the company's Pre-Tax Income, Taxes, and Net Income. On the CFS, Net Income is lower, and you add back the last two components since they're both non-cash expenses. These items boost the company's FCF because they're non-cash items that reduce the company's taxes, similar to Depreciation. Does OID Really Matter? In most cases, no, not really. Most Debt is not issued at a huge discount to par value; the 1-3% range is typical in normal markets. The company saves a tiny amount on taxes as a result, especially in countries with relatively low corporate tax rates… …and it takes a lot of extra work to set up these OID calculations, especially if there are many tranches of Debt. So, be familiar with OID, but don't obsess over it. You could easily simplify it or ignore it in case studies and modeling tests and be fine.
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: 17793 SuperfastCPA
Bond Amortization Schedule How Its Setup And Used (Bond Issued At Premium)
 
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How to setup and use an amortization schedule for a bond (debt amortization), example amortizes debt for a bond issued at a premium (present value greater 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 premium amount on the bond (amount the PV is greater than its FV), the premium 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 premium, schedule 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), amortization schedule is used to determine the interest expense recognized on the income statement and amortization of bond premium on the balance sheet,detailed calculations for accounting by Allen Mursau
Views: 11186 Allen Mursau
Explanation of Cash Flows, Stocks, & Bonds
 
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This is a video presentation over some of the main concepts discussed in a Financial Management course.
Views: 104 TheRoyRoberts

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