Each question in this quiz is timed.
Bonds payable not designated at fair value through profit or loss shall be measured initially at
Fair value
Fair value plus bond issue costs
Fair value minus bond issue costs
Face amount
After initial recognition, bonds payable shall be measured at
Amortized cost using the effective interest method.
Fair value through profit or loss.
Either amortized cost using the effective interest method or fair value through other comprehensive income.
Either amortized cost using the effective interest method or fair value through profit or loss.
The "amortized cost" of bonds payable means
Face amount plus premium on bonds payable
Face amount minus discount on bonds payable
Face amount minus bond issue cost
Face amount plus premium on bonds payable, minus discount on bonds payable and minus bond issue cost
Which of the following statements is true about electing the fair value option for measuring bonds payable?
The effective interest method of amortization must be used to calculate interest expense.
Discount or premium is disclosed in the notes to financial statements.
The fair value of the bond and the principal obligation value must be disclosed.
If the fair value option is elected, it must be applied to all bonds.
Under the fair value option, bonds payable shall be measured initially at
Fair value plus bond issue cost
Fair value minus bond issue cost
Bonds that mature on a single date are called
Term bonds
Serial bonds
Debenture bonds
Callable bonds
Bonds issued with scheduled maturities at various dates are called
Convertible bonds
Costs incurred in connection with the issuance of ten-year bonds which sold at a slight premium should be
Charged to retained earnings when the bonds are issued
Expensed in the year in which incurred
Capitalized as organization cost
Reported as a deduction from bonds payable and amortized over the ten-year bond term
Unamortized debt discount should be reported as
Direct deduction from the face amount of the debt
Direct deduction from the present value of the debt
Deferred charge
Part of the issue cost
The issuer of a 10-year term bond sold at par three years ago with interest payable May 1 and November 1 each year, shall report at year-end
Liability for accrued interest
Addition to bonds payable
Increase in deferred charges
Contingent liability
When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be
Decreased by accrued interest from June 1 to November 1
Decreased by accrued interest from May 1 to June 1
Increased by accrued interest from June 1 to November 1
Increased by accrued interest from May 1 to June 1
A bond issued on June 1 has interest payment dates of April 1 and October 1. Bond interest expense for the current year ended December 31 is for a period of
Three months
Four months
Six months
Seven months
How would the amortization of premium on bonds payable affect each of the following? Carrying amount of bond ; Net Income
Increase ; Decrease
Increase ; Increase
Decrease ; Decrease
Decrease ; Increase
How would the amortization of discount on bonds payable affect each of the following?
Carrying amount of bond ; Net income
