CHAPTER 12
NONCURRENT (LONG-TERM) LIABILITIES
LEARNING OUTCOMES
After completing this chapter, you will be able to do the following:
- Determine the initial recognition and measurement and subsequent measurement of bonds.
- Discuss the effective interest method and calculate interest expense, amortization of bond discounts/premiums, and interest payments.
- Discuss the derecognition of debt.
- Explain the role of debt covenants in protecting creditors.
- Discuss the financial statement presentation of and disclosures relating to debt.
- Discuss the motivations for leasing assets instead of purchasing them.
- Distinguish between a finance lease and an operating lease from the perspectives of the lessor and the lessee.
- Determine the initial recognition and measurement and subsequent measurement of finance leases.
- Compare and contrast the disclosures relating to finance and operating leases.
- Describe defined contribution and defined benefit pension plans.
- Compare and contrast the presentation and disclosure of defined contribution and defined benefit pension plans.
- Calculate and interpret leverage and coverage ratios.
SUMMARY OVERVIEW
- The sales proceeds of a bond issue are determined by discounting future cash payments using the market rate of interest at the time of issuance (effective interest rate). The reported interest expense on bonds is based on the effective interest rate.
- Future cash payments on bonds usually include periodic interest payments (made at the stated interest rate or coupon ...
