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Identify the differences between service and merchandising companies.Explain the recording of purchases under a perpetual inventory system.Explain the recording of sales revenues under a perpetual inventory system.Explain the steps in the accounting cycle for a merchandising company.Distinguish
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2. CHAPTER 15 LONG-TERM LIABILITIES
3. Explain why bonds are issued.
Prepare the entries for the issuance of bonds and interest expense.
Describe the entries when bonds are redeemed or converted.
Describe the accounting for long-term notes payable.
Contrast the accounting for operating and capital leases.
Identify the methods for the presentation and analysis of long-term liabilities. Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements?
Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases).
Forward-looking Information
Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image).
Timeliness (no real time financial information)
1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements?
Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases).
Forward-looking Information
Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image).
Timeliness (no real time financial information)
4. Long-Term Liabilities Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation.
Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt.
Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets.
Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining service-years of the affected employees.
Gain or Loss - Volatility in pension expense can be caused by sudden and large changes in the market value of plan assets and by changes in the projected benefit obligation. Two items comprise the gain or loss:
difference between the actual return and the expected return on plan assets and,
amortization of the unrecognized net gain or loss from previous periodsService Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation.
Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt.
Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets.
Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, specifically to the remaining service-years of the affected employees.
Gain or Loss - Volatility in pension expense can be caused by sudden and large changes in the market value of plan assets and by changes in the projected benefit obligation. Two items comprise the gain or loss:
difference between the actual return and the expected return on plan assets and,
amortization of the unrecognized net gain or loss from previous periods
5. Bond Basics
6. Bond Basics
7. Bond Basics
8. Bond Basics
9. Bond Basics
10. Bond Basics
11. Bond Basics
12. Bond Basics
13. Accounting for Bond Issues
14. Accounting for Bond Issues
15. Accounting for Bond Issues
16. Issuing Bonds at Face Value
17. Issuing Bonds at a Discount
18. Issuing Bonds at a Discount
19. Issuing Bonds at a Discount
20. Issuing Bonds at a Premium
21. Issuing Bonds at a Discount
22. Accounting for Bond Retirements
23. Accounting for Bond Retirements
24. Accounting for Bond Retirements
25. Accounting for Bond Retirements
26. Accounting for Bond Retirements
27. Accounting for Bond Retirements
28. Accounting for Bond Retirements
29. Accounting for Other Long-Term Liabilities
30. Accounting for Other Long-Term Liabilities
31. Accounting for Other Long-Term Liabilities
32. Accounting for Other Long-Term Liabilities
33. Accounting for Other Long-Term Liabilities
34. Accounting for Other Long-Term Liabilities
35. Accounting for Other Long-Term Liabilities
36. Capitalization Criteria:
Transfer of ownership
Bargain purchase option
Lease term => 75% of economic life of leased property
Present value of minimum lease payments => 90% of FMV of property Accounting for Other Long-Term Liabilities
37. Accounting for Other Long-Term Liabilities
38. Accounting for Other Long-Term Liabilities
42. Present Value Concepts Related to Bond Pricing
43. Present Value Concepts Related to Bond Pricing
44. Present Value Concepts Related to Bond Pricing
45. Present Value Concepts Related to Bond Pricing
46. Present Value Concepts Related to Bond Pricing
47. Effective-Interest Method of Bond Amortization
48. Effective-Interest Method of Bond Amortization
49. Effective-Interest Method of Bond Amortization
50. Straight-line Method of Bond Amortization
51. Copyright