41. The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds.
42. If $500,000 par value bonds with a carrying value of $476,000 are redeemed at 97, a loss on redemption will be recorded.
43. Each payment on a mortgage note payable consists of interest on the original balance of the loan and a reduction of the loan principal.
44. A long-term note that pledges title to specific property as security for a loan is known as a mortgage payable.
45. The amount by which the principal of a mortgage will be reduced in the next year will be reported on the statement of financial position as a current liability.
46. Non-current liabilities are reported in a separate section of the statement of financial position immediately below current liabilities.
47. The times interest earned ratio is computed by dividing net income by interest expense.
a
49.The effective-interest method of amortization results in varying amounts of amortization and interest expense per period but a constant interest rate.
a
50.Bond premiums must be amortized using the effective interest method.