Learning Objectives

By the end of this section, you will be able to:

• The students should be able to develop the accounting for long-term obligations and investments in stocks and bonds.



• Evaluate the alternatives for financing on a long-term basis.
• Describe the differences among various types of bonds.
• Record the entries associated with a bond issue sold at face value.
• Explain the valuation of investments and financial statement presentation.
• Record the entries for a bond issue sold at a discount and sold at a premium, using the straight-line amortization method.
• Determine the items that impact the selling price of a bond.
• Record the entries for the redemption of bonds.
• Determine the carrying value of a bond.
• Distinguish between a capital lease and an operating lease and record the entries associated with the capitalization of a lease.
• Explain why a corporation would invest in the bonds of other corporations.
• Account for investments in bonds:
  • At acquisition
  • While the corporation owns them
  • At the time of sale