Non-current Liabilities

Non-current Liabilities

1. Bonds Payable

   • Arises from a bond indenture
   • Represents promise to pay
   • Valuation
     • Selling price set by
       • Supply and demand
       • Risk
       • Market and economy
     • Types
       • Issued at Par
         • Investment community rate = Stated rate
       • Issued at premium or discount
         • Investment community rate ≠ Stated rate
         • At premium bond sells for more than face value, and discount is vice versa
   • Types
     • Secured and unsecured
     • Term, serial and callable
     • Convertible, commodity-backed and deep-discount
     • Registered and bearer
     • Income and revenue
   • Amortization
     • Of a discount - increases bond interest expense
     • Of a premium - decreases bond interest expense

2. Long-term notes payable

   • The difference with notes payable is the maturity of the date
   • Is similar to bonds payable
     • Valued at the present value of its future interest and principal cash flow
     • Amortizes discount or premium
   • Types
     • Issued at face value
     • Not issued at face value
       • Zero-interest bearing notes
       • Interest bearing notes
     • Mortgage
     • Notes issued for property, goods or services

3. Special issues

   • Presentation and analysis
   • Extinguishment
     • With cash before madurity
     • By transferring assets
     • With modification of terms
   • Fair Value option
     • With unrealized gains or losses
       • Reported as part of net income
   • Off-balance-sheet financing