Accounting 2 Chapters 14/15

Bearer Bond

A bond that is payable to the bearer or person who has physical possession of the bond

Bond

A long-term debt instrument issued by corporations to raise money from the public

Bond Certificate

The note given to bondholders

Bond indenture

The bond contract

Bond issue

A group of bonds

Callable bond

A bond that gives the company issuing the bond the right to buy it back before the maturity date at a specified price

Capital Lease

A lease in which a company acquires such a substantial interest in the leased property that, for all practical purposes, the lease company owns the asset

Carrying value of debt

Remaining liability on the pro forma balance sheet

Collateral

An asset of group of assets specifically named in a debt agreement to which the creditor has claim if the borrower fails to comply with the terms of the note.

Convertible bond

A bond feature that allows bondholders to exchange the bonds for common of preferred stock

Covenants

Restrictions that lenders place on the borrowing company to protect the lenders’ interest

Debenture bonds

Unsecured bonds; bonds with no specific assets pledged as collateral

Discount on a note

The excess of the face value of a note over its present value (cash proceeds)

Face rate on the note

USed to determine the cash interest the borrower pays

Face value of the note

The amount the borrower will repay the lender for principal

Holder of the note

The lender

Lease

An agreement to convey the use of a tangible asset from one party to another in return for rental payments

Lump-sum payment note

A debt instrument that contains a promise to pay a specific amount of money at the end of a specified period of time

Marker of the note

The borrower

Marker, or effective, interest rate

The actual interest rate changed on a note’s proceeds

Mortgage

A long-term note secured with real estate, such as land or buildings, as collateral

Mortgage bond

A bond that is secured with real estate

Operating lease

A rental agreement for a period of time substantially shorter than the economic life of the leased asset

Periodic payment and lump-sum note

A debt instrument that combines periodic payments and a final lump-sum payment.

Periodic payment note

A debt instrument that contains a promise to make a series of equal payments consisting of both interest and principal at equal time intervals over a specified time period

Premium on a note

The amount that the present value (cash proceeds) of a note exceed its face value

Proceeds of the note

The amount of cash raised from issuance of a note

Registered bonds

Bonds that are numbered and made payable in the name of the bondholder

Secured bond

A bond that has some part of the issuing corporation’s assets serving as security for the loan.

Serial bond

A bond issue hat has specified portions of the bond issue coming due periodically over the life of the bond issue

Subordinated bonds

Unsecured bonds whose rights to repayment are ranked after, or subordinated to, some other person or group of creditors

Unsecured bond

A bond that does not have any specific assets pledged as security against it's repayment

Adjunct Account

An account that is added to another account balance to reveal its carrying value

Discount on Bonds Payable

A contra liability account that represents the difference between the face value and the carrying value of the bonds

Discount on Notes Payable

A contra liability account that represents the difference between the carrying value and the fae value if the note; exists when the face value is greater than the carrying value

Paid-in Capital from Treasury Stock

An account used to show the amount of additional capital generated from the reissue of treasury stock

Paid-in Capital in Excess of Par Value

An account used to reflect the difference between the net assets received and the par value of the stock issued

Premium on Bond Payable

An account that represents the difference between the face value and the carrying value of the bonds; exists when the face value is less than the carrying value

Stock Dividends Distributable

An account credited on the date of declaration of a stock dividend to show the par value of the shares the corporation will issue on the date of distribution