define property tax
Based on specified rate for every 100 of asset value of property
invoices issued in March
What 3 liabilities does an employer incur related to the employees salary/ wages?
- net pay owed to employees
- employee payroll deductions
- employer payroll obligations
What does net pay equal?
gross pay(money employee earns) - deductions( EI, CPP, federal tax)
define provisions
uncertain cost and timing liabilities
What are the 3 characteristics of provisions
- must be present obligation from past event
- must require probable outflow
- company has to be able to estimate amount of obligation
- *needs all 3 to be recorded on balance sheet
define contingent liability
existing or possible obligations as a result from past events.
what are the three options when recording a contingent liability?
- do nothing, unlikely
- disclose in the notes, likely but unknown amount
- record liability, likely and known amount
what are the characteristics of fixed principal
- equals total amount to pay back/ total number of payments
- reduction of principal is consistent every period
- interest paid on every payment will decrease as the principal is decreasing
what are the characteristics of blended payments?
- total payment stays consistent but each component changes
- repaid in equal, periodic amounts including interest
What does it mean when a bond is issued at a discount? Face Value? Premium?
face value: coupon rate = market rate
discount: coupon rate < market rate
premium: coupon rate > market rate
How to calculate PMT?
Coupon Rate x Face Value/ payments per year
What is the formula for the discount to amortize?
Interest Payment - Interest Expense
What is the formula for the interest expense?
Carrying amount x Market interest rate
What is implicated by a bond being offered at a discount?
- Interest Expense higher than the actual interest paid
- bonds issued below face value
- less attractive to investor than market
- gives discount to investor to make bond equally as attractive as market
What is implicated by a bond being offered at a premium?
- more attractive to investor than market
- charge premium to investor to make bond equally as attractive as market
- bond issued above face value
- Interest expense lower than actual interest paid
