1. Explain the major difference in the repayment of a mortgage note payable as compared to...

1. Explain the major difference in the repayment of a mortgage note payable as compared to that of a bond payable.

2. Contrast operating and capital leases.

3. Why should a company allocate bond discounts and bond premiums in each period when bonds are outstanding?

Solutions

Expert Solution

Answer-1:
The major difference in the repayment of a mortgage note payable as compared to that of a bond payable:

Mortgage note payable is the long-term loan which is taken for a property and property itself is used as the collateral or security in case of such loans. Mortgage note payable requires the periodic repayment of the loan (example; monthly). Each installment of the loan includes the principal as well as the interest component.
On the other hand bond payable is a long-term debt which is taken for a long-term period which shall be repaid at the end of the period. There are no interim payments in case of the bonds payable and the principal and the accumulated interest is repaid at the end of the period of the bond.

ekkarill92 answered 2 years ago

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