Bonds Payable

Bonds Payable arises from the indenture that is created when the company creates a contract that represents a promise pay:

• A fixed value to the bondholder, which will represent payment of the amount borrowed via the bond, where payment occurs on a specified maturity date.
• Interest charges on the bond which will be paid to the bondholder at a specified rate and frequency.

Bonds and therefore bonds payable have many different rules or features.  Since bonds or bonds payable represent a long term obligation of the company, they are shown in the long term liabilities section of the balance sheet.