Valuation and allocation is most likely an issue for long-term debt if:

Question

Quizplus · Accepted Answer

When bonds are issued at a discount or premium, their face value and coupon payments do not match the market interest rate. This creates a difference between the carrying value (book value) of the bond and its market value (fair value). Valuation and allocation is therefore an issue for long-term debt in this situation. Bonds sold on the open market may also have fluctuating fair values, but this does not necessarily affect their allocation on the balance sheet. Loans from banks and short-term leases do not involve the same premium/discount valuation issues as long-term debt.

Valuation and Allocation Is Most Likely an Issue for Long-Term