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1、ConfirmingPagesCHAPTER14BondsandLong-TermNotesOVERVIEWThischaptercontinuesthepresentationofliabilities.Specifically,thediscus-sionfocusesontheaccountingtreatmentoflong-termliabilities.Long-termnotesandbondsarediscussed,aswellastheextinguishmentofdebtanddebtconvertibleinto
2、stock.LEARNINGAfterstudyingthischapter,youshouldbeableto:OBJECTIVES●LO14–1Identifytheunderlyingcharacteristicsofdebtinstrumentsanddescribethebasicapproachtoaccountingfordebt.(p.797)●LO14–2Accountforbondsissuedatfacevalue,atadiscount,oratapremium,recordinginterestusingthee
3、ffectiveinterestmethodorusingthestraight-linemethod.(p.799)●LO14–3Characterizetheaccountingtreatmentofnotes,includinginstallmentnotes,issuedforcashorfornoncashconsideration.(p.810)●LO14–4Describethedisclosuresappropriatetolong-termdebtinitsvariousformsandcalculaterelatedf
4、inancialratios.(p.814)●LO14–5Recordtheearlyextinguishmentofdebtanditsconversionintoequitysecurities.(p.819)●LO14–6Understandtheoptiontoreportliabilitiesattheirfairvalues.(p.825)●LO14–7DiscusstheprimarydifferencesbetweenU.S.GAAPandIFRSwithrespecttoaccountingforbondsandlong
5、-termnotes.(pp.801,809,821,and828).sspi2532X_ch14_796-857.indd796pi2532X_ch14_796-857.indd796111/01/127:03PM1/01/127:03PMConfirmingPagesFINANCIALREPORTINGCASEServiceLeader,Inc.ThemoodisbothupbeatandfocusedonthiscoolOctobermorning.ExecutivesandboardmembersofServiceLeader,I
6、nc.,aremeetingwithunderwritersandattorneystodiscussthecompany’sfirstbondofferinginits20-yearhistory.Youareattendinginthecapacityofcompanycontrollerandtwo-yearmemberoftheboardofdirectors.Thecloselyheldcorporationhasbeenfinancedentirelybyequity,internallygener-atedfunds,and
7、short-termbankborrowings.Bankratesofinterest,though,haverisenrecentlyandthecompany’sunexpectedlyrapid,butwel-come,growthhaspromptedtheneedtolookelsewherefornewfinancing.Underconsiderationare15-year,6.25%firstmortgagebondswithaprincipalamountof$70million.Thebondswouldbecal
8、lableat103anytimeafterJune30,2015,andconvertibleintoServiceLeadercommonstockattherateof45sharesp
