FA 42 - Bonds issued at a Premium
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- Опубликовано: 8 фев 2025
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Module 9 examines bonds and liabilities. We learn how to account for bond discounts and premiums using the effective interest method.
This is way easier to understand than my current course material on this topic.
There is a mistake on premium account balance for April 30,2025,the figure should be (716217-28513=687704) so the bond carrying amount will be 10,687704 and thus the other calculations will follow accordingly. While typing instead of 716217 you typed 716271.
Thanks - I'll work on fixing that!
My pleasure :) See you tomorrow at the exam hall..The videos are really helpful..Thanks a lot..!! :D
Typo for the premium in the calculator. @9:31
I really appreciate your videos and thank you for them! I am a student in NL and find your videos pretty useful, hopefully, I'll pass my course hahah just It would be much better if you would make a video for warranties as well since you mentioned bonds and warranties too, thank you!
I really appreciate your videos and thank you！
there is mistake on premium accounts for April 30, 2024 (716,217-28,513) so our bond carrying amount is 10,687,704 this is typical mistake you type 716,271 on place of 716,217
Yeah true. I thought there was something wrong with my calculator lol.
ATTN: Tony Bell from the future
There is a mistake on premium account balance for April 30,2025,the figure should be (716217-28513=687704) so the bond carrying amount will be 10,687704 and thus the other calculations will follow accordingly. While typing instead of 716217 you typed 716271. Thanks to my fellow student Anna for pointing that out !!🤣🤣🤣🤣🤣🤣
amazing videos, I am studying more than at the university from my profs :D Tony, please make a videos about corporate finance ^_^
how do you calculate the bond issue price w.o the bond quote?
What kind of account do the discount and premium belong to? Are they liabilities, so they are both debits decreasing and credits increasing? I'm unclear about whether the discount or premium should be written on the debit or the credit. thank you!
A discount is a contra-liability. So if you have Bonds Payable of $400,000 and a discount of 10,000, you do Bond - Discount = Bonds Net (400k-10k=390k).
A premium is an "adjunct liability". So if you have bonds payable of 400,000 and a premium of 10,000, you present it as Bond+premium = Bonds Net (400K+10k=410K)
Hi Tony, I used the financial calculator and it gave me $10,743,873.74 instead. I computed it as you showed in the seperate tutorial. I put 10,000,000 for FV ; PMT = 10,000,000 x 7% x 1/2 = $350,000 ; N = 20 ( 10 x2 ) ; 1/y =3 ( 6/2 ). Would this be correct? We are not getting the same numbers.
You got it right! This is just a rounding thing - a bond quote of 107.439 on a 10,000,000 bond gives a PV of 10,743,900. So we are only $26.26 apart due to rounding.
@TRUTonyBell so would it wouldn't matter if I computed either or ? I just want to make sure because my professor does make us use the calculator we don't get any bond quotes at all
@@LenaSlavova Your answer is correct - that's the one to use!
I need more explanation
Hi! Looks like I have missed why is this a good deal for the investor?
because the interest rate are higher for premium bond, so collectively the money that they get are far higher when bonds are purchased at a premium to due their higher interest rates as to lower interest rates of discounted bonds.
At 9:29 miscalculation
math error you transposed numbers in a calcukation..687758 should be 687704