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Accounting 2037 - Chapter 21 Vocab
Terms in this set (33)
Type of note in which a company agrees to pay the holder the face value on the maturity date and to pay interest on the face value periodically at a specified rate.
Serially numbered legal document that specifies the value, the annual interest rate, and the maturity date
Asset's original cost minus the related accumulated depreciation.
Have a provision that allows the issuer to purhase them.
Transfers the risk and benefits of ownership from the lessor to the lessee.
Rate at which the issuer of a bond pays interest on the face value each period until the maturity date.
Exchangeable into common stock at the option of the individual bondholders.
Deferred tax asset
Account that a corporation uses to report on its balance sheet the amount by which its future income will be reduced by deductible temporary differences.
Deferred tax liability
Account a corporation uses to report on its balance sheet the amount of its future additional income taxes resulting from taxable temporary differences.
Pension plan that specifies that amount that a company must pay to its employees each year during their retirement.
Specifies the amount that a company must contribute to a pension plan each year while its employees work.
Economic substance is more important than legal form
In the context of a lease agreement, because a particular lease transfers the risks and benefits of ownership from the lessor to the lessee, the lessee records an asset that it does not legally own (the leased property)
Effective interest method
Computing annual interest expense by multiplying the annual yield by the book value of the bonds at the beginning of the year.
Expected inflation rate
Additional interest rate paid by the borrower to compensate for the expected inflation over the life of the borrowing.
Stated value on a note (or bond) that must be paid on the maturity date.
Company's ability to adapt to change.
Cost to a company of borrowing money for a period.
Agreement giving the right to use property, plant, or equipment without transferring legal ownership of the item.
Company that acquires the right to use a leased item.
Company that gives up the use of a lease item.
Use of borrowing by a corporation to increase the return to common stockholders.
Relates to the amount of cash a company will generate over the long run to pay off its liabilities as they become due.
Specific day when a company that issued a bond (or note) promises to pay the principal (and interest) amounts to the bond (or note) holder.
Long-term liability for which the lender has a specific claim against an asset of the borrower.
Does not transfer the risks and benefits of ownership.
Agreement by a company to provide income to its employees after they retire.
Projected benefit obligation
Obligation of a company to its employees in regard to its pension plan for the work they have done to date.
Amount of uncertainty that exists about the future operations of a company.
Interest rate that a borrower would pay, and a lender would receive, when there is no risk of default by the borrower and when no inflation is expected.
Additional interest that a borrower, such as a company, pays when there is a possibility that it will default.
Occurs when a corporation records an expense (or a revenue) for financial reporting in a period different from that used for income tax reporting, but the total lifetime expense (or revenue) is the same for both.
Market rate at which bonds are issued.
Bonds that do not pay interest each period, but pay the interest on the maturity date.
THIS SET IS OFTEN IN FOLDERS WITH...
Accounting 2037 - Chapter 18 Vocab
Accounting 2037 - Chapter 19 Vocab
Accounting 2037 - Chapter 20 Vocab
Accounting 2037- Chapter 22
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