Course Outline: Module 9
Long-Term Liabilities
ACC 201 Financial Accounting
The primary goal of this module is: Introduce students to debt obligations that extend beyond one year,
including bonds, long-term notes, debentures, and capital leases.
Module 9 – Long-Term Liabilities
Introduction
One way that companies finance and expand their operations is through issuing long-term debt, that is,
debt that extends beyond one year. In this chapter, we will look at a number of options for companies
using this form of financing.
<insert clip art “long-term debt”>
Learning Objectives
After completing this module, students will be able to:
1. Describe debt securities and the markets in which they are issued.
2. Account for the issuance of long-term debt.
3. Use the straight-line method to account for premium/discount amortization.
4. Use the effective interest rate method to account for premium/discount amortization.
5. Determine the after-tax cost of financing with debt and explain financial leverage.
6. Compare and contrast operating and capital leases.
7. Analyze a company’s long-term solvency using information related to long-term liabilities
Due This Week
Assignment
Format
Grading
Interactive Lecture and Quiz
PowerPoint presentation
5 points
Lesson 1 Homework
CengageNow
5 points
PowerPoint presentation
5 points
Lesson 1 – Recording Bonds Payable and
Notes Payable
Lesson 2 – Interest Expense and Repayment
of Principal
Interactive Lecture and Quiz
©2012 Gateway Community College
2
Lesson 2 Homework
CengageNow
5 points
Interactive Lecture and Quiz
PowerPoint presentation
5 points
Lesson 3 Homework
CengageNow
5 points
BlackBoard
100 points
Lesson 3 – Debt Financing, Leases and Ratio
Analysis
Exam 3 – Chapters 7-9
*Use this table to fill out the course calendar. Be sure to add dates in the course calendar.
Learning Activities
The learning activities section is a way for you to sequence your students learning. Consider this as
your way of guiding them to understanding and scaffolding their learning. Be creative, use the right
tool for the right objectives and whenever possible integrate knowledge checks with feedback and/or
reflection. Be sure to provide an overview of each activity in the sequence and how it will help the
learner achieve the learning objectives. Add learning activities as necessary.
Lesson 1 – Recording Bonds Payable and Notes Payable
This lesson introduces bonds and notes payable, describes different types of bonds, and illustrates
journal entries for issuing long-term debt.
Reading
Read pages 424 - 428 in your textbook, Cornerstones of Financial Accounting.
This reading will introduce long-term debt, specifically bonds and notes. Notice the different types of
bonds and the journal entries to record bond issues.
Interactive Lecture
Recording Bonds Payable and Notes Payable
In this narrated PowerPoint lecture you will learn how to account for long-term debt, including issuance,
payment of interest and repayment of debut
Activity
Assignment Name
CengageNow Homework
Graded Assignment
YES
<insert CengageNow link here>
Points Possible
5 pts
www.cengagebrain.com
Lesson 1 Homework Problems from CengageNow
©2012 Gateway Community College
3
After completing the reading and the interactive lecture, proceed to CengageNow to complete Module 9,
Lesson 1, “Recording Bonds Payable and Notes Payable”.
Grading and Feedback
You can expect this assignment to be graded in CengageNow immediately after your submission.
Lesson 2 – Interest Expense and Repayment of Principal
Recognizing interest expense, especially when bonds are issued at either a premium or discount, can be
challenging. This lesson teaches two methods for accounting for these discounts and premiums, the
straight-line method and the effective interest rate method.
Reading
Read pages 429 - 439 in your textbook, Cornerstones of Financial Accounting.
This reading will show you the two methods for accounting for bond discounts and premiums. Pay close
attention to the amortization tables illustrated in this section. Understanding these tables will make the
accounting much easier.
Interactive Lecture
Interest Expense and Repayment of Principal
In this narrated PowerPoint lecture you will learn how to record interest payments using both the straightline and the effective interest rate method. Spend enough time with the exercises and illustrations to
make sure you understand them.
Activity
Assignment Name
CengageNow Homework
Graded Assignment
YES
<insert CengageNow link here>
Points Possible
5 pts
www.cengagebrain.com
Lesson 2 Homework Problems from CengageNow
After completing the reading and interactive lecture, proceed to CengageNow to complete Module 9,
Lesson 2, “Interest Expense and Repayment of Principal”.
Grading and Feedback
You can expect this assignment to be graded immediately in CengageNow after your submission.
Lesson 3 – Debt Financing, Leasing and Ratio Analysis
This lesson explores the pros and cons of debt financing, the use of leases, and three ratios that are used
in the analysis of a company’s long-term debt situation.
©2012 Gateway Community College
4
Reading
Read pages 440 - 445 in your textbook, Cornerstones of Financial Accounting.
This reading will help you weigh the positive and negative impacts of using debt for financing. You will
also learn some basics of leasing, both operating and capital leases. Lastly, you will see three ratios that
are used to analyze long-term debt.
Interactive Lecture
Debt Financing, Leasing and Ratio Analysis
In this narrated PowerPoint lecture you will learn the good and bad of using debt for financing. You will
also learn the difference between operating and capital leases and explore ratio analysis for debt.
.
Activity
Assignment Name
CengageNow Homework
Graded Assignment
YES
<insert CengageNow link here>
Points Possible
5 pts
www.cengagebrain.com
Lesson 3 Homework Problems from CengageNow
After completing the reading and interactive lecture, proceed to CengageNow to complete Module 9,
Lesson 3, “Debt Financing, Leasing and Ratio Analysis”.
Grading and Feedback
You can expect this assignment to be graded immediately in CengageNow after your submission.
Next Step – Module 10
©2012 Gateway Community College
5