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Lee Corporation Equity Scenario

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Restructuring Debt
Part A: Through reporting all types of long term debt, there are certain requirements that must be made. There are three main categories that long term debt can be divided into, which include bonds, notes payable and capital leases. For all long term notes and bonds, they are “valued at the present value of its expected future interest and principal cash flows. The company amortizes any discount or premium over the life of the note” (Kieso, Weygandt, & Warfield, 2007, p. 685).Provided below is the comparison on what is required through reporting bonds, and other long term loans. One of the main types of long term debt is bonds payable. Bonds are a type of debt that represents a promise to pay back a certain amount of money by a maturity date, along with periodic interest that has accrued from the face value. Through bonds, companies are required to report certain things while attaining bonds. These requirements are to state the interest rate of the bond, if the bond has a discount or premium, the effective yield or market rate, the amortization accrued. If a bond were to have a discount, then this would increase the bond interest expense, whereas a premium would decrease the bond interest expense. For any unamortized bond issue costs, they must be amortized over the life of the debt and treated as a deferred charge. There are many covenants or restrictions for bonds. For long term notes payable, they are similar to the bonds, in that their value is at present value with interest and principal added in, and they amortize any discounts or premiums. For notes payable, it is dependent on if they are issued at face value or not. If they are issued at face value then there is no discount or premium. Along with that, reporting notes payable is dependent on the interest rate that is on the loan. There are also notes payable that include...

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