Interest Payable - Guide, Examples, Journal Entries for Interest Payable
After date and for value received, Clean Coal Technologies, Inc. ("CCTI") This debenture shall be subject to an annual interest rate of 10% per annum payable . To put it simply, accrued interest is the total interest accumulated on a bond since its last coupon date. If the current holder of a bond decides to. An example of a government debenture would be any government-issued Treasury These loans are repayable on a fixed date and pay a fixed rate of interest.
Nonconvertible debentures are regular debentures that cannot be converted into equity of the issuing corporation. To compensate, investors are rewarded with a higher interest rate when compared with convertible debentures.
Features of a Debenture All debentures have specific features.
Purchase of Own Debentures: Journal Entries | Capital | Accounting
First, a trust indenture is drafted, which is an agreement between the issuing corporation and the trust that manages the interest of the investors. Next, the coupon rate is decided, which is the rate of interest that the company will pay the debenture holder or investor.
This rate can be either fixed or floating and depends on the company's credit rating or the bond's credit rating. The Debenture is due in full including all principal and accrued interest on or before May 13, In addition to the Conversion Rights discussed in paragraph 4 above, the holder shall have the following rights: CCTI shall reserve for issuance upon conversion sufficient, equivalent recapitalized equity to meet its obligations hereunder during the entire conversion period.
The undersigned Holder acknowledges that he understands that the securities represented by this Convertible Debenture have not been registered pursuant to the Securities Act of or pursuant to the laws of the State of Florida or any other state and that the company is relying on exemptions from registration of these securities.
Accrued Interest: Definition, Formula, and Example
Each Debenture and common share which may be issued as a result of the conversion of the debenture shall be imprinted with a restrictive legend as follows: This Debenture Common Stock may not be assigned unless so registered or qualified or unless an exemption exists, the availability of which is to be established by issuer's counsel at the holder's expense; provided, however, if the proposed assignment is made to a person or entity outside of the United States or Canada, and not for the benefit of or to any U.
The assignee under any such assignment shall be likewise subject to the terms of this restriction upon any proposed assignment or transfer".
Bondholders who have not received their interest can throw an offending company into bankruptcy, or seize its assets if that is stipulated in the contract. Security in different jurisdictions[ edit ] In the United Statesdebenture refers specifically to an unsecured corporate bond,  i.
Where security is provided for loan stocks or bonds in the US, they are termed 'mortgage bonds'. However, in the United Kingdom a debenture is usually secured. Like other secured debts, the debenture gives the debtor priority status over unsecured creditors in a bankruptcy;  however debt instruments where security is pledged to specific assets such as a bond receive a higher priority status in a bankruptcy than do debentures[ citation needed ].
In Asia, if repayment is secured by a charge over land, the loan document is called a mortgage ; where repayment is secured by a charge against other assets of the company, the document is called a debenture; and where no security is involved, the document is called a note or 'unsecured deposit note'.