FAR — Quick Sheet
Long-Term Debt (Bonds & Notes)
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- Stated rate < market rate → issued at discount; stated > market → premium
- Interest expense = Carrying value × market rate; Cash = Face × stated rate
- Discount: expense > cash paid, carrying value increases toward face
- Premium: expense < cash paid, carrying value decreases toward face
- Bond issuance costs reduce the carrying amount of the debt directly
- TDR (debtor): future cash flows < carrying value → immediate gain, no future interest; future cash flows > carrying value → new effective rate, no gain