BUS 321 Lecture Notes - Lecture 14: Book Value, Cash Flow, Income Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 321
• Professor: simonsuwanyangyuan

Document Summary

Long-term debt consists of obligations of an entity arising from past transactions or events that are not payable within the next year or operating cycle, whichever is longer. These obligations normally require a formal agreement between the parties involved that often includes certain covenants and restrictions for the protection of both lenders and borrowers. Long-term liabilities include bonds payable, mortgage notes payable, long-term notes payable, lease obligations, and pension obligations. Bonds are debt instruments of the issuing corporation used by that corporation to borrow funds from the general public or institutional investors. The use of bonds provides the issuer an opportunity to divide a large amount of long-term indebtedness among many small investing units. Bonds are issued with a stated (coupon or nominal) rate of interest expressed as a percentage of the face value of the bonds. Face value also represents the amount due at maturity (also known as maturity value or par value).