Bonds Payable
Long-term debt securities issued by companies to raise capital, promising periodic interest payments and principal repayment at maturity.
Bonds Payable
Long-term debt securities issued by a company to raise capital, with a promise to pay interest periodically and repay the principal at maturity.
For example, a corporation might issue $10 million in 5% bonds due in 10 years, obligating it to pay $500,000 in interest annually and return $10 million to bondholders at maturity.
Bonds allow companies to access capital markets for large-scale financing needs, often at lower interest rates than bank loans. The bond issuance process involves determining size, maturity, interest rate, and covenants, followed by marketing to investors. On financial statements, bonds appear as long-term liabilities, with the current portion reclassified to current liabilities.