Wiley GAAP 2008

Definitions of Terms

Amortization	The process of allocating an amount to expense over the periods benefited.
Bond	A written agreement whereby a borrower agrees to pay a sum of money at a designated future date plus periodic interest payments at the stated rate.
Bond issue costs	Costs related to issuing a bond (i.e., legal, accounting, underwriting fees, printing, and registration costs).
Book value approach	Recording the stock issued from a bond conversion at the carrying value of the bonds converted.
Callable bond	A bond in which the issuer reserves the right to call and retire the bond prior to its maturity.
Carrying value	The face amount of a debt issue increased or decreased by the applicable unamortized premium or discount plus unamortized issue costs.
Collateral	Asset(s) pledged to settle the obligation to repay a loan.
Contingently convertible	Convertible securities where either the exercisability of the conversion feature or the conversion price are dependent upon the occurrence or nonoccur‐rence of some defined event (e.g., an IPO or change in control).
Convertible debt	Debt that may be converted into common or preferred stock at the holder's option after specific criteria are met.
Covenant	A clause in a debt contract written for the protection of the lender that outlines the rights and actions of the parties involved when certain conditions occur (e.g., when the debtor's current ratio declines beyond a specified level).
Debenture	Long‐term debt not secured by collateral.
Discount	Created when ...