【正文】 use the benefits of joint ventures are uncertain, panies could incur substantial liabilities with few, if any, assets resulting from their efforts. 1261 Research and Development Arrangements ? These arrangements involve situations in which an enterprise obtains the results of research and development activities funded partially or entirely by others. ? Accounting issue: Is this arrangement, in essence, a means of borrowing to fund research and development or is it simply a contract to do research for others? 1262 Analyzing a Firm’s Debt Position The term leverage refers to the relationship between a firm’s debt and assets or its debt and stockholders’ equity. A mon measure of a firm’s leverage is the debttoequity ratio. Total Liabilities Total Stockholders’ Equity DebttoEquity Ratio = 1263 Analyzing a Firm’s Debt Position Another measure of a pany’s performance relating to debt is the number of times interest is earned. Times interest earned is calculated using the following formula: Ine Before Taxes + Interest Expense Interest Expense Times Interest Earned = 1264 Accounting for Troubled Debt Restructuring ? A significant accounting problem is created when economic conditions make it difficult for an issuer of longterm debt to make the payments under the terms of the debt instrument. ? The revision of debt terms to avoid bankruptcy proceedings or foreclosure on the debt is referred to as troubled debt restructuring. 1265 Transfer of Assets in Full Settlement (Asset Swap) A debtor that transfers assets, such as real estate or inventories, to a creditor to fully settle a payable will recognize two types of gains or losses: 1. A gain or loss on disposal of the asset 2. A gain arising from the concession granted in the restructuring of the debt (continues) 1266 Transfer of Assets in Full Settlement (Asset Swap) The putation of these gains and/or losses is made as follows: Carrying value of assets being transferred Major value of asset being transferred Carrying value of debt being liquidated Difference represents gain or loss on disposal Difference represents gain on restructuring (continues) 1267 Transfer of Assets in Full Settlement (Asset Swap) An investor always recognizes a loss on the restructuring due to concessions granted. Carrying value of investment liquidated Market value of asset being transferred Difference represents loss on restructuring 1268 Modification of Debt Terms 。 dividends are not. ? Current market rates of interest may be favorable relative to stock market prices. ? The charge against earnings for interest may be less than the amount of expected dividends. 1215 Accounting for Bonds ? Conceptually, bonds and longterm notes are similar types of debt instruments. ? The trust indenture (the bond contract) associated with bonds generally provides more extensive detail than the contract terms of a note. 1216 Accounting for Bonds There are three main considerations in accounting for bonds: 1. Recording the issuance or purchase 2. Recognizing the applicable interest during the life of the bonds 3. Accounting for retirement of bonds either at maturity or prior to the maturity date 1217 Nature of Bonds ? Bond certificates, monly referred to simply as bonds, are frequently issued in denominations of $1,000. ? The amount printed on the bond is the face value, par value, or maturity value of the bond. ? The group contract between the corporation and the bondholders is known as the bond indenture. 1218 ? Debt securities issued by state, county, and local governments and their agencies are collectively referred to as municipal debt. ? Bonds that mature on a single date are called term bonds. ? When bonds mature in installments, they are referred to as serial bonds. Nature of Bonds 1219 ? Secured bonds offer protection to investors by providing some form of security, such as a mortgage on real estate or the pledge of other collateral. ? A collateral trust bond is usually secured by stocks and bonds of other corporations owned by the issuing pany. ? Unsecured bonds (frequently termed debenture bonds) are not protected by the pledge of any