Prepared by: C. Douglas Cloud Professor Emeritus of AccountingPepperdine University 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.$tudent %ersionPrepared by: C. Douglas Cloud Professor Emeritus of AccountingPepperdine University Long-Term Liabilities: onds and !otesChapter 1&These slides should be viewed using the presentation mode (click the icon to start presentation).These slides should be viewed using the presentation mode (click the icon to start presentation). 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.Learning "b#ective $$. Compute t%e potential impact of long-term borro&ing on earnings per s%are. 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.'inancing CorporationsLO 1 LO 1Corporations (nance t%eir operations using t%e follo&ing sources:Short-term debt, such as purchasing goods or services on account.Long-term debt, such as issuing bonds or notes payable.Equity, such as issuing common or preferred stock. 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.'inancing CorporationsA bond is a form of an interest-bearing note. Li)e a note* a bond re+uires periodic interest payments* and t%e face amount must be repaid at t%e maturity date."bligasi merupa)an surat utang #ang)a menenga%-pan#ang yang dapat dipinda%tangan)an yang berisi #an#i dari pi%a) yang menerbit)an untu) membayar bunga pada periode tertentu dan melunasi po)o) utang pada &a)tu yang tela% ditentu)an )epada pi%a) pembeli obligasi tersebutLO 1 LO 1 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.'inancing Corporations'uc(adee Corporation is considering the !ollowing plans to issue debt and e)uity*LO 1 LO 1 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.,n deciding among (nancing plans* t%e e-ect on earnings per s%are is often considered.Earnings per s%are .EP/0 measures t%e income earned by eac% s%are of common stoc). ,t is computed as follo&s:LO 1 LO 1'inancing Corporations+arnings per $hare ,-et .nco"e # /re!erred 0ividends-u"ber o! Co""on $hares 1utstanding 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, ecept !or use as per"itted in a license distributed with a certain product or service or otherwise on a password#protected website !or classroo" use.LO 1 LO 1'inancing CorporationsAssu"e the !ollowing data !or 'uc(adee Corporation*+arnings be!ore interest and inco"e taes are 2300,000.4he ta rate is &05.All bonds or stoc(s are issued at their par or !ace a"ount.Rencana /endanaan Alternati! 6 Laba 2 300,000Rencana /endanaan Alternati! 6 Laba 2 300,000/lan 1 /lan 2 /lan 712 5 bonds 8 8 22,000,000/re!erred 95 stoc(, 2:0 par 8 22,000,000 1,000,000Co""on stoc(, 210 par 2&,000,000 2,000,000 1,000,0004otal 2&,000,000 2&,000,000 2&,000,000+arnings be!ore interest and inco"e ta 2 300,000 2 300,000 2 300,0000educt interest on bonds 8 8 2&0,000.nco"e be!ore inco"e ta 2 300,000 2 300,000 2 :;0,0000educt inco"e ta 720,000720,000 22&,000-et inco"e 2 &30,000 2 &30,000 2 77;,0000ividends on pre!erred stoc( 8 130,000 90,000Available !or dividends 2 &30,000 2 700,000 2 2&;,000$hares o! co""on stoc(