Issuers sometimes retire debt before matutiry, for eg., to eliminate high-interest debt when rates are declining or to improve debt ratios All extinguishment of debt before scheduled maturities are fundamentally alike and should be accounted for similarly The net carrying amount is the amount due at maturity, adjusted for Unamortized premium (discount), and Cost of […]
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Securities with characteristics of liabilities and equity are convertible debt that may be exchanged for common stock of the issuer When the debt and equity elements of convertible debt are treated as inseparable, the entire proceeds should be accounted for and reported as a liability until conversion Warrants allow a debtholder to obtain common shares […]
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Core Capital Structure Corporate Capital Structure may be financed by bonds, equity, and preference share capital. Bonds Bonds are the main form of long-term debt financing. It is a formal contract to pay an amount of money to the holder at a certain date. Most bonds provide for a series of cash interest payments on […]
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