The book value of bonds payable is the combination of the accounts Bonds Payable and Discount on Bonds Payable or the combination of Bonds Payable and Premium on Bonds Payable. Forecasting interest using the average debt balance is the more intuitive approach, because a company repays debt over the borrowing term (and reduced principal directly […]

Companies can pay off callable bonds earlier than their final maturity date, and so the total interest can be less if the company exercises its right to do so. Similarly, convertible bonds give investors the chance to convert their bonds to stock in a company, and some bonds give bondholders the right to choose the […]

While FIFO refers to first in, first out, LIFO stands for last in, first out. This method is FIFO flipped around, assuming that the last inventory purchased is the first to be sold. LIFO is a different valuation method that is only legally used by U.S.-based businesses. Practical Application and Best Practices If inflation is […]