Principles of Accounting: Chapter Thirteen

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Chapter 13 discusses numerous issues related to accounting for long-term obligations. The chapter begins with illustrations of the accounting for term and level payment notes, including how to calculate periodic payments. This necessarily requires consideration of future and present value calculations, which receive preliminary coverage within this chapter.

The middle portion of the chapter introduces bonds payable and related features for these financial instruments. A number of examples are used to illustrate appropriate bond accounting, whether the bonds are issued at par, a premium, or discount. Coverage includes both the straight-line and effective-interest methods.

The chapter includes coverage of special bond accounting situations, including bonds issued between interest payment dates, bond retirements, and fair value accounting. The chapter closes with a section describing debt analysis techniques and ratios, and the reporting of lease-related obligations.

Exercises

To aid in your understanding of this chapter, exercises with solutions are available for free download at Bookboon.com. You will find these exercises very helpful in providing models and guidelines for solving all of the problems at principlesofaccounting.com.

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Problems
Goals Achievement
Fill in the Blanks
Multiple Choice
Objectives
Key Terms

Problems: Chapter Thirteen

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Basic		Problem	Worksheet	Combined	Objective

	B-13.01				Basic accounting for long-term note payable

	B-13.02				Future value concepts

	B-13.03				Present value concepts

	B-13.04				Calculating note payments and preparing entries

	B-13.05				Terminology relating to bonds

	B-13.06				Bonds at par

	B-13.07				Bonds at a premium, straight-line amortization

	B-13.08				Bonds at a discount, straight-line amortization

	B-13.09				Bonds at a premium, effective-interest amortization

	B-13.10				Bonds at a discount, effective-interest amortization

	B-13.11				Bonds issued between interest dates

	B-13.12				Basic bond retirement

	B-13.13				Debt analysis

	B-13.14				Commitments and leases



Involved		Problem	Worksheet	Combined	Objective

	I-13.01				Future value and present calculations

	I-13.02				Entries and calculations for notes payable

	I-13.03				Bonds issued at a premium; effective interest

	I-13.04				Bonds issued at a discount; effective interest

	I-13.05				Team-based approach to bond pricing

	I-13.06				Bond pricing, effective-interest amortization, and retirement

The preceding table includes links to "Basic" and "Involved" problems. Each link will download the file containing a spreadsheet for the problem and a template worksheet on which you can prepare the solution electronically. If you see a light bulb icon on a worksheet, just mouse over above the icon and a comment box will appear. The comments include useful suggestions for improving your spreadsheet skills.

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