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A Note on Teaching Bond Accounting
Avinash Arya,
University of Michigan - Flint
ABSTRACT. This note describes a more effective way of teaching bond accounting to students. The traditional method found in current accounting texts focuses on discount/ premium and present value tables. In contrast, the new method eliminates the discount/premium and instead focuses on the economics of bond financing. It also uses Excel® rather than present value tables. The new method is consistent with GAAP and contemporary financial reporting practices and is shown to be pedagogically superior in an actual classroom setting. In addition to bond accounting, several examples are presented to show how the new method can be applied to a wide variety of topics including installment sales, investment in securities, and lease accounting. The new method should be of potential interest to the faculty teaching introductory or intermediate accounting courses.
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