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Disclosure long-term debt in a financial statement

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How do you analyze and report long-term debt? What disclosures are required relative to long-term debt?

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https://brainmass.com/business/financial-statements/337030

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First examine the loan documents to compile the data which will be presented in the disclosures to the financial statements. You will want the total debt, the remaining principal balance, the interest rate, the due date of the loan, the payment amount and the collateral.

Then it is important to inquire about whether the loan has been sold, if it is current, if there have been any modifications, and if the collateral is still secured.

Next the note balance would be confirmed ...

Solution Summary

The 317 word solution presents a step by step procedure to gather the information required for disclosure in the financial statements, and further explains the types of information that are required to be disclosed.

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Similar Posting

Andrews, CPA, has been engaged to audit the financial statements of Broadwall Corporation for the year ended December 31, 20X1. During the year, Broadwall obtained a long-term loan from a local bank pursuant to a financing agreement that provided that the

1. Loan was to be secured by the company's inventory and accounts receivable.
2. Company was to maintain a debt-to-equity ratio not to exceed two to one.
3. Company was not to pay dividends without permission from the bank.
4. Monthly installment payments were to commence July 1, 20X1.
In addition, during the year the company also borrowed, on a short-term basis, from the
president of the company, including substantial amounts just prior to the year-end.

Required

a. For purposes of Andrews' audit of the financial statements of Broadwall Corporation,
what substantive tests should Andrews employ in examining the described loans? Do
not discuss internal control.

b. What are the financial statement disclosures that Andrews should expect to find with
respect to the loans from the president?
AICPA

17-26 (Substantive tests and disclosures for long-term debt)

Andrews, CPA, has been engaged to audit the financial statements of Broadwall Corporation for the year ended December 31, 20X1. During the year, Broadwall obtained a long-term loan from a local bank pursuant to a financing agreement that provided that the

1. Loan was to be secured by the company's inventory and accounts receivable.
2. Company was to maintain a debt-to-equity ratio not to exceed two to one.
3. Company was not to pay dividends without permission from the bank.
4. Monthly installment payments were to commence July 1, 20X1.
In addition, during the year the company also borrowed, on a short-term basis, from the
president of the company, including substantial amounts just prior to the year-end.

Required

a. For purposes of Andrews' audit of the financial statements of Broadwall Corporation,
what substantive tests should Andrews employ in examining the described loans? Do
not discuss internal control.

b. What are the financial statement disclosures that Andrews should expect to find with
respect to the loans from the president?
AICPA

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