Bonds Payable

Bonds Payable arises from an indenture, which is created when the company enters into a contract that represents a promise to 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 payable represent a long term obligation of the company, they are shown in the long term liabilities section of the balance sheet.