Exam 14: Financing Liabilities: Bonds and Notes Payable

On April 1, 2013, the bondholders of Brick, Inc. exchanged convertible bonds for common stock. Brick's carrying amount of these bonds was less than the market value but greater than the par value of the common stock issued upon conversion. If Brick used the book value method of accounting for the conversion, which of the following occurred as a result of recording this conversion?

Serial bonds cannot be sold at a premium or discount.

Exhibit 14-6 Omega, Inc. issued $100,000 of its 7% five-year bonds on January 1, 2014, at 98. Interest is paid on January 1 and July 1. The bonds are callable at 104 and straight-line amortization is used. The bonds are recalled on April 1, 2016. -Refer to Exhibit 14-6. Interest expense for 2016 will be

Exhibit 14-1 A $300,000, ten-year, 8% bond issue was sold to yield 9% interest payable annually. Actuarial information for 10 periods is as follows: -Refer to Exhibit 14-1. At date of issuance cash received would be

Companies report cash flows associated with long term liability transactions in the investing section of the statement of cash flows, because the money was an investment in the future of the company.

When a company amortizes a premium, the interest expense recorded is

Interest expense is more than interest paid when bonds are issued at par.

Bonds payable with a conversion privilege are accounted for as

Exhibit 14-4 Piazzi, Inc. sold $400,000 of its 9%, five-year bonds dated January 1, 2013, on May 1, 2013, for $393,000 plus accrued interest. Interest is paid on January 1 and July 1 and straight-line amortization is used. -Refer to Exhibit 14-4. The net liability for the bonds after recording the sale would be

The portion of proceeds from the sale of bonds with detachable stock warrants attributable to the warrants is accounted for as a(n)

When a zero coupon bond is issued, interest is remitted periodically over the life of the bonds. The interest remitted is the present value of the face value of the bonds.