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Restructuring Debt

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Restructuring of Debt Data |

Long-term debt consists of probable future sacrifices of economic benefits arising from present obligations that are not payable within a year or the operating cycle of the company, whichever is longer. Long term debt is a way to finance and gain capital when the company cash flow is minimal. To name a few types of long term debt: bonds payable, notes payable, mortgages payable, pension liabilities, and lease liabilities. This assignment will define basic terms such as long-term debt, bonds, mortgage, and capital leases. In addition answer questions in reference to the ABC Company journal entries, postretirement and note disclosure.
A bond arises from a contract known as a bond indenture. A bond is a form of a long term promissory note that is regulated under the federal securities law or state laws. Typically, a bond represents a promise to pay. Bonds are a unique way to raise capital for organizational needs. Bonds are accounted for in a similar to notes payable with the exception that bonds are normally issued to different lenders. These lenders, also known as investors, may sell their bonds to another investor prior to their maturity. There are several types of bonds, however, the more common forms of bonds are secured and unsecured bonds. Secured bonds are backed by the borrower’s collateral, thus meaning no tangible property or any other kind of product is attached to that debt. A well-known example of a secured bond is a mortgage. As for the unsecured bonds, there is no collateral required and common examples of unsecured debts are arrangements such as credit cards, medical bills and store cards. Regardless of the type of liability, companies are required to show the interest rate, maturity dates, current interest expense, and future interest and principle payments by period.
Firms often choose to lease...

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