Superficial Drill Down on Long Term Liabilities Sheet Three

Superficial drill down on long term liabilities sheet three:

• ​For bonds, if sold at a premium, know to take the face value * (1+premium). 
• Bond issued at a discount - first interest expense that is greater than the cash payment made to bondholders.
• Upon the retirement of a bond,  difference between reacquisition price and the carrying amount of the bond is a gain or loss.
• When a bond is retired, the principal, unamortized pre­mium or discount, and bond issue costs that were incurred and recorded as an asset must be written off.
• Term bonds all mature together after a fixed term - serial bonds mature in installments.
• FASB ASC 480-10-25-4 - requires mandatory redeemable stock to be classified as a liability, with proper disclosure.
• Discount resulting from the determination of a note payable's PV should be reported on the balance sheet as a direct reduction from the face amount of the note.
• Effective interest method of amortization is used for bonds issued at a premium - face value of the bonds at the beginning of the period by the contractual interest rate.
• An unconditional redemption feature on stock must be reported as a liability. 
• Covenants are intended to protect the interest of the lending institution.

​cc: Reporting