Asked by Jackson Brown on Jun 23, 2024
Verified
If bonds payable are not callable, the issuing corporation
A) can exchange them for common stock
B) can repurchase them in the open market
C) must get special permission from the SEC to repurchase them
D) is more likely to repurchase them if the interest rates increase
Bonds Payable
Long-term liabilities on a company's balance sheet, representing debt obligations that the company must repay to bondholders at a specified date.
Callable
A feature of certain securities that gives the issuer the right to redeem the security before its maturity date, often at a specified price.
Issuing Corporation
The company or entity that offers its securities for sale to investors for the purpose of raising capital.
- Determine the categories of bonds according to their redemption policies and attributes.
- Explain the journal entries associated with issuing bonds, paying bond interest, amortizing bond discount/premium, and redeeming bonds.
Verified Answer
VL
Vernessa LesaneJun 23, 2024
Final Answer :
B
Explanation :
If bonds payable are not callable, it means the issuing corporation cannot repurchase them before the maturity date. However, the corporation can still repurchase them in the open market if they choose to do so.
Learning Objectives
- Determine the categories of bonds according to their redemption policies and attributes.
- Explain the journal entries associated with issuing bonds, paying bond interest, amortizing bond discount/premium, and redeeming bonds.