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BYP 10-5 (Continued)
1. The cash flow of the company as it relates to bonds payable will be
adversely affected as follows:
Annual interest payments on the new issue
2. The amount of interest expense shown on the income statement
will be higher as a result of the decision to issue new bonds:
These comparisons hold for only the 3-year remaining life of the 8%,
Sincerely,
BYP 10-6 COMMUNICATION ACTIVITY
To: Sam Masasi
From: I. M. Student
Subject: Bond Financing
(1) The advantages of bond financing over common stock financing include:
1. Secured or unsecured bonds. Secured bonds have specific assets
(3) State laws grant corporations the power to issue bonds after formal
BYP 10-7 ETHICS CASE
(a) The stakeholders in the Olathe case are:
(b) The ethical issues:
Questions:
Is what Ken wants to do legal? Is it unethical? Is Ken’s action brash
and irresponsible? Who may benefit/suffer if Ken arranges a high-risk
bond issue? Who may benefit/suffer if Barb Lowery gains control of
Olathe?
(c) The rationale provided by the student will be more important than the
specific position because this is a borderline case with no right answer.
BYP 10-8 ALL ABOUT YOU
computation.
(a) Wisconsin state income taxes for a single person with a taxable income
(c) The state gasoline tax in Wisconsin is 32.9 cents per gallon and the federal
(f) Federal income taxes for a single person with a taxable income of $60,000
BYP 10-8 (Continued)
(g) The total taxes paid therefore are computed as follows, based on a
$60,000 income amount:
State income tax .............................................. $ 3,701
BYP 10-9 ALL ABOUT YOU
BYP 10-10 FASB CODIFICATION ACTIVITY
(b) Long-term obligations are those scheduled to mature beyond one year
term obligations:
Bonds, mortgages and other long-term debt, including capitalized
lease.
(see §210.4–06):
(i) The general character of each type of debt including the rate of
interest;
the financial statements if significant.
IFRS EXERCISES
IFRS 10-1
liquidity.
Differences between GAAP and IFRS include: (1) GAAP allows straight line
amortization of bond discounts and premiums, but IFRS requires the
effective-interest method in all cases, (2) IFRS does not isolate unamortized
IFRS 10-2
IFRS 10-3
IFRS10-4 INTERNATIONAL FINANCIAL REPORTING PROBLEM
(a) Trade payables represent amounts payable for goods and services
(b) Provisions for amounts potentially payable to the vendors of
companies and businesses acquired are established provisionally at
fair value at the time of acquisition, based on management’s judgment
and assessment of the outcome of performance related conditions
the current provisions for contingent consideration.
(c) The weighted average interest rate on bank loans and overdrafts was
