Exam 10: Financing: Long-Term Liabilities

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -If the market rate of interest is 12 percent and a company is issuing long-term bonds paying 10 percent, at what percent would those liabilities have to be discounted, assuming semiannual compounding?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Which of the following is true of a premium on bonds payable?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Which of the following is LEAST likely to be classified as a current liability?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -On January 1, 2012, Santos Hospital issued a $250,000, 10 percent, 5-year bond for $231,601. Interest is payable on June 30 and December 31. Santos uses the effective-interest method to amortize all premiums and discounts. Assuming an effective interest rate of 12 percent, how much interest expense should be recorded on June 30, 2012?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - The present value of $1,000 to be received in 3 years when interest is 12 percent compounded quarterly is computed by discounting at

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -The net amount of a bond liability that appears on the balance sheet is the

Altus Company just borrowed $300,000 from its bank. Compute Altus' payment amount under each of the following set of independent terms.

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -If equipment is purchased by issuing a 10-year, $200,000 interest bearing note at a stated rate of 8 percent (payable annually), the transaction would be entered in the accounting records by crediting

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -The present value of $1 discounted for 10 years at 8 percent compounded annually is 0.4632. The present value of an annuity of $1 discounted for 10 years at 8 percent compounded annually is 6.7101. Given this information, the present value of $80 to be received in 10 years at 8 percent compounded annually is

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Bonds usually sell at a discount when

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - The two major categories of liabilities on a typical balance sheet are

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -The method of bond amortization that results in a varying amount of amortization each period is the

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - A 1-year, $15,000, 12 percent (payable annually) note is signed on April 1. If the note is prematurely repaid on September 1 of the same year, how much interest expense is incurred?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - LaFluer Corporation issued $400,000 of 15-year bonds on January 1. The bonds pay interest on January 1 and July 1 with a stated rate of 8 percent. If the market rate of interest at the time the bonds are sold is 10 percent, what will be the issuance price (approximate) of the bonds?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -A 10-year capital lease requiring payments of $25,000 per year is signed. The entry to record the first payment would probably include a

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Bonds usually sell at a premium when

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -Flute Corporation issued $200,000, 10-year, 9 percent bonds at a time when the market rate of interest was 12 percent. These bonds will be issued for

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -If no interest payments are made on a note, then the difference between the present value of the cash flows associated with the note and the face value of the note represents

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. - An investor wants to withdraw $8,000 (including principal) from an investment fund at the end of each year for 10 years. How should the investor compute the required initial investment at the beginning of the first year if the fund earns 10 percent compounded annually?

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. -he present value of an annuity of $500 for 10 years at 10 percent interest compounded annually is