Long-term Debt Securities
- Please refer back to chapter 14.
- Recorded at cost (purchase price plus fees); Price is the quoted price which is the present value of the future cash flows.
- When the stated rate (SR) of interest equals the market rate (MR) of interest the security will sell at par; SR>MR gives rise to a premium; SR< MR gives rise to a discount.
- When purchased between interest dates, include accrued interest in amount paid for bond.