Unit 15: Long-Term Liabilities and Investment in Bonds

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