Wiley GAAP 2008

Endnotes

¹CUSIP is an acronym for the Committee on Uniform Security Identification Procedures of the American Bankers Association (ABA). The committee developed a nine‐digit numbering system for uniquely identifying US government, municipal, and corporate securities. The first six digits identify the issuer of the securities and the remaining three digits uniquely identify the particular issue.

²The steps in the shortcut method are as follows:

1. Determine the difference between the fixed rate to be received on the swap and the fixed rate to be paid on the bonds.

2. Combine that difference with the variable rate to be paid on the swap.

3. Compute and recognize interest expense using that combined rate and the fixed‐rate liability's principal amount. (Amortization of any purchase premium or discount on the liability also must be considered, although that complication is not incorporated in this example.)

4. Determine the fair value of the interest rate swap.

5. Adjust the carrying amount of the swap to its fair value and adjust the carrying amount of the liability by an offsetting amount.

³The definition of a public entity has been expanded to include reporting entities that are the debtor under conduit debt securities traded in domestic or foreign exchange or over‐the‐counter market, including local or regional markets. These securities, sometimes referred to as industrial revenue bonds, are defined as certain limited‐obligation revenue bonds, certificates of participation, or similar debt instruments ...