Exam 6: Financing Activities

Porter Corporation NOTE: The following multiple choice questions require present value information. On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for: What accounting method should Porter use to account for the equipment lease?

According to U.S.GAAP,which of the following provides the most reliable measure for fair value measurement?

Santa Corporation NOTE: These multiple choice questions require present value information. Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property,plant,and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below is selected financial data for Santa and a portion of the company's operating lease footnote. Using the information provided by Santa Corporation calculate the company's 2012 fixed asset ratio.

One criteria that must be satisfied for a firm to recognize an obligation is that the transaction or event giving rise to the obligation has already ____________________.

All of the following are typically recognized as accounting liabilities except:

An agreement in which a purchaser agrees to pay specified amounts periodically to a seller for products or services is known as a ________________________________________.

Which kind of dividends have an interest-bearing promise to pay dividends?

In the chart below,assign the directional effect (I = increase,D = decrease,or NE = no effect)of each of the following four transactions on the components of the book value of common shareholders' equity. a.Treasury stock acquired (company uses the cost method). b.Treasury stock in transaction a.reissued at an amount greater than original acquisition price. c.Treasury stock in transaction a.reissued at an amount less than the original acquisition price. d.Restricted stock issued (grant date).

A ____________________ lease arrangement is one in which the lessee assumes the risks and enjoys the rewards of ownership.

Santa Corporation NOTE: These multiple choice questions require present value information. Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property,plant,and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below is selected financial data for Santa and a portion of the company's operating lease footnote. Using the information provided by Santa Corporation calculate the present value of the operating leases.

Santa Corporation NOTE: These multiple choice questions require present value information. Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property,plant,and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below is selected financial data for Santa and a portion of the company's operating lease footnote. Using the information provided by Santa Corporation estimate the average life of the operating leases.

All of the following are the general principles underlying the valuation of liabilities except:

Porter Corporation NOTE: The following multiple choice questions require present value information. On January 1,2012,Porter Corporation signed a five-year noncancelable lease for certain machinery.The terms of the lease called for: At January 1,2012,Porter should record an asset and liability with respect to the equipment lease equal to

The acceptable method of accounting for stock options is the _________________________ method.

Which of the following is not a condition that requires capital lease accounting?

Why can exercising stock options can create cash flow problems for managers at the exercise date? What is an alternative to this problem?

All of the following are typically recognized as accounting liabilities except:

Which of the following is an acceptable method of accounting for employee stock options?

A security that has both equity and debt characteristics is referred to as a ______________________________.

The first date at which employees can exercise their stock options is termed the _________________________.