ACIS 3115 Chapter Notes - Chapter 14: Sinking Fund, Commercial Bank, Discounting

• School: Virginia Tech
• Department: Accounting and Information Systems
• Course: ACIS 3115
• Professor: brovozsky

Document Summary

Bonds- most common corp debt, med/large co"s borrow $ by issuing bonds to public. Exception --subordinated debenture-not entitled to any liquidation pmt until claims of other debt issues are satisfied. Mortgage bond- backed by lien on real estate; less risky-> low interest callable (redeem/buy back if rates fall) sinking fund redemption retire bond gradually to maturity. Serial bonds-retired in installments convertible bonds-retired as consequence of bondholder converting into stock. Debenture bond- secured only by full faith & credit of corp; most corporate bonds. If bankruptcy, debenture holders treated same as general creditors! Recording bonds at issuance: bond payable to issuer, investment in bonds to investor; determining selling price: premium-sell for>face amt, Discount-sell for