Asked by Jalen Denoncourt on Jun 16, 2024
Verified
The balance sheet amount reported for a long-term debt on the issue date is the
A) discounted present value of the future principal repayment.
B) discounted present value of the periodic interest payments.
C) sum of the future value of principal repayment and the periodic interest payments.
D) sum of the discounted present values of the future principal repayments and the periodic interest payments.
Long-Term Debt
Debt obligations due for repayment in more than one year, often used for significant business investments.
Issue Date
The date on which a security (like a bond or stock) is issued or made available for sale.
Discounted Present Value
The current worth of a future sum of money or stream of cash flow given a specified rate of return.
- Detect and sort the distinct kinds of liabilities and equity that appear on the balance sheet.
Verified Answer
BW
Breonna WilliamsJun 23, 2024
Final Answer :
D
Explanation :
The balance sheet amount reported for a long-term debt on the issue date is the sum of the discounted present values of the future principal repayments and the periodic interest payments. This is because the debt is initially recognized at its present value, which takes into account both the principal and interest payments that will be made over time. Therefore, the balance sheet amount reflects the total amount of future cash outflows that the company is committed to making related to the debt.
Learning Objectives
- Detect and sort the distinct kinds of liabilities and equity that appear on the balance sheet.
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