ABSTRACT
This chapter shows how to account for long-term liabilities and, particularly, how to account for bonds. It explains the administration of the private loan or long-term note payable, in which case lenders and borrowers directly negotiate the terms of the loan. The chapter discusses the bond loan, a long-term money loan from a large number of lenders. It focuses on the convertible bond loan, in which case the bondholder is offered the opportunity to convert his bond loan into shares of the firm after a predetermined period. The chapter also discusses the journal entries relating to the contracting of bonds. A bond can be issued at any price agreed upon between the issuer and the bondholders. Apart from the normal bonds, with a fixed interest and redemption at maturity, there are several other types of bonds, such as: income bonds; profit-sharing bond; premium bonds; mortgage bond; and convertible bonds.
