Long Term Liabilities
Ø Understanding
Long-term
liabilities are debts with maturities of more than one year. Long-term debt
typically arises because of the need for additional funds for the purchase of
fixed assets, increasing the number of permanent working capital, buying
another company or perhaps to pay off other debts.
Ø Debt
Bonds
Bond
is a type of the most common long-term debt reported on its balance sheet. The
main aim of the bonds is to borrow in the long term if the amount of capital
needed is too large to be provided by a lender. A bond arising from a contract
known as the indenture (a contract) and a promise to pay.
Bonds
may be sold if the company's reputation is quite good and were seen as able to
remain standing during the circulation period of the bonds. Selling price of
bonds depends on bond interest rates. The greater the interest, the bond prices
will be higher, and conversely the lower the interest rates will lower the
selling price.
Ø Types
of Bonds
1. Bonds guaranteed and
not guaranteed
2. Bond futures, serial
bonds, and bonds can be redeemed
3. Konventibel bonds
backed goods and big discount
4. Registered bonds and
fiat (coupon)
5. Profit and revenue
bonds
Ø Accounting
for Bond Issuance
There are several terms
in accounting for the listing of bonds:
·
Face value is the value of the printed
bonds or bonds listed on the letter. This value indicates the amount to be paid
when the bond matures.
·
The maturity date is the date on which
bonds have been issued to be paid.
·
The interest is a fee to be paid in
addition to payment for the bonds' nominal value. This interest can be paid
monthly, or can be paid each year. Interest on the bonds is calculated based on
a certain percentage of the nominal value of bonds.
·
Date interest is the bond interest
payment date, usually within one year paid twice.
Ø Recording
of Bond Expenditures
Bonds
issued are recorded in the accounts at nominal value. The sale price is not
equal to nominal bonds, the difference is accounted for separately which if
sold at the nominal difference is noted in the bond premium account, if the
selling price is below the nominal value, the difference is recorded in the
account of a discount bond.
Bond expenditures may
be recorded in two ways:
a. Which accounted for
only bonds that were sold or
b. Bonds are sold and
unsold recorded
Ø Length
of Wesel libertine
Difference
between notes payable and notes payable lancer is a long term maturity date.
Accounting for notes and bonds are very similar. Such as bonds, notes valued at
the present value of cash flows of future interest and principal by any
premiums or discounts are amortized equally over the life of the note.
Ø Reporting
of Long-Term Debt
Companies
that have a lot of long-term debt issue in large numbers is often just reported
an estimate of the balance sheet and supporting comments and sekedul in the
accompanying notes. If the company has long-term obligations without
conditions, it should be disclosed if the following conditions:
1.
Obligations can not be canceled, or can
be canceled only in the unlikely occurrence of a contingency or with the
permission of other parties.
2.
It is the obligation of the supplier of
the project funding agreement for the facility that will provide goods and
services dikontrolkan.
3.
It has a remaining term liabilities are
more than one year
