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The discount that results when the selling price of bonds is less than the face value of the bonds.
Occurs when the market interest rate is GREATER than contractual interest rate.
all benefits and risks of ownership are on lessee, effectively results in purchase of property.
Contractual interest rate
rate that determines the amount of interest paid by borrower and received by lender
bonds that can be converted into shares
unsecured bonds, issued against general credit of borrower
Debt to Total Assets
Total Liabilities / Total Assets
Earnings before Interest and Tax
Net Income + Interest Expense + Income Tax Expense
Effective Interest Method of Amortization
A method of amortizing a bond discount or bond premium that results in periodic interest expense equal to a constant % of the carrying value of the bond.
Interest Coverage Ratio
ability of a company to meet interest obligations.
Market (effective) rate of interest
rate that investors require for lending money to a corporation
Off-balance sheet financing
the intentional effort by a company to structure its financing arrangements so as to avoid showing liabilities on its books
lessee has tempory use of property, lessor still retains all ownership risks and rewards
Premium (bonds payable)
difference that results when the selling price of th ebonds is greater than the face value of the bonds.
Occurs when the market interest rate is LESS than the contractual interest rate.
value today of an amount to be received at some date in the future after taking interest rates into account
Redeemable bonds (callable bonds)
issuer can redeem at stated dollar amount before maturity date
bondholder can redeem at a stated dollar amount before maturity
mature in installments
mature at a single specific future date
Bonds, Long term liabilites