Reading 39: Non-current (Long-term) Liabilities-LOS c 习题精选 2011, center, style, label, class

1215

Session 9: Financial Reporting and Analysis: Inventories, Long-lived Assets, Income Taxes, and Non-current Liabilities
Reading 39: Non-current (Long-term) Liabilities

LOS c: Discuss the derecognition of debt.

 

 

A firm can recognize a gain or loss on derecognition of a bond the firm has issued:

A) either before maturity or at maturity.

B) before maturity, but not at maturity.

C) at maturity, but not before maturity.

---

 

If a firm redeems a bond before maturity for a price that is different from the carrying value of the bond liability, the firm will recognize the difference as a gain or a loss. At maturity, the carrying value of the bond liability is equal to the face value of the bond, therefore the firm does not experience a gain or loss by repaying the face value.

1215

A company redeems $10,000,000 of bonds that it issued at par value for 101% of par or $10,100,000. In its statement of cash flows, the company will report this transaction as a:

A) 10,100,000 CFF outflow.

B) $10,000,000 CFF outflow and $100,000 CFO outflow.

C) $10,100,000 CFO outflow.

---

Cash paid to redeem a bond is classified as a cash flow from financing activities.