Long-Term Debt Can Be Categorised as Financing with an Initial

question 27

Multiple Choice

Long-term debt can be categorised as financing with an initial maturity:

• A) over 180 days and less than a year.
• B) between 1 and 3 years.
• C) over 1 year.
• D) between 3 and 12 years.

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Definitions:

Amortization

The method of incrementally expensing the original value of an intangible asset throughout its operational life.

Bond Indenture

A legal contract between a bond issuer and bondholders, detailing the terms and conditions of the bond.

Straight-Line Amortization

A method of calculating the gradual reduction in the cost value of an intangible asset over its useful life in fixed, equal amounts.

Bond Discount

Bond Discount occurs when the bond's market price is below its face value, indicating that it was sold for less than its original value.