BU127 Chapter Notes - Chapter 11: Asset, Operating Lease, Deferred Income
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BU127 Full Course Notes
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Document Summary
Bu127 chapter 11: reporting and interpreting non-current liabilities. Private placement: raising long-term debt from banks, insurance companies, and pension fund companies. Type of debt often called notes payable: written promise to pay stated sum of money at one more specific future dates (maturity dates) Can be traded in established markets that provide bondholders with liquidity (e. g. ability to sell bond and receive cash quickly) Bond principle: amount payable at maturity of bond, and the basis for computing periodic cash interest payments. Also known as par value and face amount. Stated rate: rate of interest per period specified in the bond contract. Each periodic interest payment = principle x stated interest rate. Debenture: unsecured bond; no assets are specifically pledged to guarantee repayment. Callable bonds: may be called for early retirement at the option of the issuer. Convertible bonds: may be converted to other securities of the issuer (usually common shares) Indenture: bond contract that specifies legal provisions of bond issue.
