Businesses take out debt obligations, including loans payable and bonds payable, for many reasons. It may be to purchase real estate, equipment, or inventory; expand operations; or increase working capital. Before debt obligations are obtained, it is important to understand the financial reporting implications.
This article explores some of the common accounting topics related to debt financing: how to initially measure debt, accounting for debt issuance costs, debt covenants, presenting debt as either current or noncurrent, and other details that may be present in debt agreements.
Length: 2 pages (PDF 86 kB)