The balance sheet amount reported for a long-term debt on the issue date is the
A)discounted present value of the future principal repayment.
B)discounted present value of the periodic interest payments.
C)sum of the future value of principal repayment and the periodic interest payments.
D)sum of the discounted present values of the future principal repayments and the periodic interest payments.

Question

Quizplus · Accepted Answer

The balance sheet amount reported for a long-term debt on the issue date is the sum of the discounted present values of the future principal repayments and the periodic interest payments. This is because the debt is initially recognized at its present value, which takes into account both the principal and interest payments that will be made over time. Therefore, the balance sheet amount reflects the total amount of future cash outflows that the company is committed to making related to the debt.

The Balance Sheet Amount Reported for a Long-Term Debt on the Issue