Question 1

Bonds typically have a face value of $1,000.

Accepted Answer

A) True 
 B)False

Question 2

Muir,Ltd.measures its trading securities at fair value.It has liabilities that it also measures using the fair value option.Muir has bonds outstanding (originally sold for $2,400,000)in the amount of $2,000,000 with a current bond premium of $340,000.The bonds were selling at 101 on the market on December 31.If its Fair Value Adjustment on Bonds Payable account currently contains a debit amount of $400,000,what adjustment is necessary to report the value of the bonds under the fair value option.

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 3

While the payment on an installment loan is the same each period,the amount applied to principal decreases each period.

Accepted Answer

A) True 
 B)False

Question 4

A company's calculated effective borrowing rate is higher under IFRS than U.S.GAAP.

Accepted Answer

A) True 
 B)False

Question 5

Hudson,Inc.issued $500,000 of 5%,5-year bonds dated January 1,2016 on July 1,2016 when the market required 4% interest for bonds of similar risk.The bonds pay interest on December 31 each year.The bonds sold at $532,744 including accrued interest.
Required: Prepare the journal entries for the sale of the bonds and the December 31 payment for the interest for these bonds.

Accepted Answer

The answer of Hudson,Inc.issued $500,000 of 5%,5-year bonds dated January...

Question 6

Premium amortization reduces the carrying value of the bonds.

Accepted Answer

A) True 
 B)False

Question 7

Parrish Industries has bonds outstanding (originally sold for $4,400,000)in the amount of $5,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.At what value should it report these bonds on its balance sheet at year end?

Accepted Answer

A) $5,000,000 
B) $5,100,000 
C) $4,900,000 
D) $5,520,000 
A) $5,000,000 
B) $5,100,000 
C) $4,900,000 
D) $5,520,000

Question 8

Zhang Company,an IFRS company,sold $1,000,000 of 6%,3-year bonds on January 1,2016.The bonds pay semi-annual interest each June 30 and December 31.It cost the company $30,000 in bond issue costs. What is the effective semi-annual interest rate for the bonds?

Accepted Answer

A) 3% 
B) 3)5% 
C) 3)56% 
D) 3)76% 
A) 3% 
B) 3)5% 
C) 3)56% 
D) 3)76%

Question 9

Wilson Corp.issued $1,000,000 of 4% bonds on April 30 at par value.The bonds were dated January 1.The company pays interest on June 30 and December 31 each year.How much will the buyer need to pay the company in accrued interest?

Accepted Answer

A) $5,000 
B) $6,667 
C) $10,000 
D) $13,333 
A) $5,000 
B) $6,667 
C) $10,000 
D) $13,333

Question 10

Under U.S.GAAP,debtors in technical default may continue to classify their debt as long-term if the creditor grants a waiver before the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 11

If a company elects the fair value option for some liabilities,it must use the fair value option for all liabilities.

Accepted Answer

A) True 
 B)False

Question 12

IFRS determines the debt component from issuing convertible bonds as the present value of the bond's future cash flows discounted at the market interest rate at the time of issuance.

Accepted Answer

A) True 
 B)False

Question 13

The fair value option for liabilities reports unrealized gains and losses ________.

Accepted Answer

A) as other comprehensive income 
B) directly to retained earnings 
C) in net income 
D) as long-term capital gains 
A) as other comprehensive income 
B) directly to retained earnings 
C) in net income 
D) as long-term capital gains

Question 14

IFRS does not permit the use of the fair value option.

Accepted Answer

A) True 
 B)False

Question 15

Clausen Corp.,an IFRS company,sold $1,000,000 of 6%,3-year bonds on January 1,2016.The bonds pay semi-annual interest each June 30 and December 31.It cost the company $32,000 in bond issue costs.Which one of the following is the correct journal entry to record the sale of the bonds?

Accepted Answer

The answer of Clausen Corp.,an IFRS company,sold $1,000,000 of 6%,3-year...

Question 16

A sinking fund is cash or other assets held in a separate bank account used to retire debt at maturity.

Accepted Answer

A) True 
 B)False

Question 17

When bondholders decide to exercise their convertible feature,the company values the conversion at the ________.

Accepted Answer

A) market value of the stock 
B) par value of the stock 
C) carrying value of the bonds 
D) par value of the bonds 
A) market value of the stock 
B) par value of the stock 
C) carrying value of the bonds 
D) par value of the bonds

Question 18

The face value of a bond is also referred to as its par value.

Accepted Answer

A) True 
 B)False

Question 19

Parrish Industries has bonds outstanding (originally sold for $5,400,000)in the amount of $6,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.What should be the balance of the Fair Value Adjustment on Bonds Payable?

Accepted Answer

A) $340,000 debit balance 
B) $840,000 debit balance 
C) $840,000 credit balance 
D) $340,000 credit balance 
A) $340,000 debit balance 
B) $840,000 debit balance 
C) $840,000 credit balance 
D) $340,000 credit balance

Question 20

Nondetachable stock warrants are in essence,convertible bonds.

Accepted Answer

A) True 
 B)False

Bonds typically have a face value of $1,000.

While the payment on an installment loan is the same each period,the amount applied to principal decreases each period.

A company's calculated effective borrowing rate is higher under IFRS than U.S.GAAP.

Premium amortization reduces the carrying value of the bonds.

Parrish Industries has bonds outstanding (originally sold for $4,400,000)in the amount of $5,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.At what value should it report these bonds on its balance sheet at year end?

Zhang Company,an IFRS company,sold $1,000,000 of 6%,3-year bonds on January 1,2016.The bonds pay semi-annual interest each June 30 and December 31.It cost the company $30,000 in bond issue costs. What is the effective semi-annual interest rate for the bonds?

Wilson Corp.issued $1,000,000 of 4% bonds on April 30 at par value.The bonds were dated January 1.The company pays interest on June 30 and December 31 each year.How much will the buyer need to pay the company in accrued interest?

Under U.S.GAAP,debtors in technical default may continue to classify their debt as long-term if the creditor grants a waiver before the balance sheet date.

If a company elects the fair value option for some liabilities,it must use the fair value option for all liabilities.

IFRS determines the debt component from issuing convertible bonds as the present value of the bond's future cash flows discounted at the market interest rate at the time of issuance.

The fair value option for liabilities reports unrealized gains and losses ________.

IFRS does not permit the use of the fair value option.

Clausen Corp.,an IFRS company,sold $1,000,000 of 6%,3-year bonds on January 1,2016.The bonds pay semi-annual interest each June 30 and December 31.It cost the company $32,000 in bond issue costs.Which one of the following is the correct journal entry to record the sale of the bonds?

A sinking fund is cash or other assets held in a separate bank account used to retire debt at maturity.

When bondholders decide to exercise their convertible feature,the company values the conversion at the ________.

The face value of a bond is also referred to as its par value.

Parrish Industries has bonds outstanding (originally sold for $5,400,000)in the amount of $6,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.What should be the balance of the Fair Value Adjustment on Bonds Payable?

Nondetachable stock warrants are in essence,convertible bonds.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Exam 16: Financing Liabilities

Bonds typically have a face value of $1,000.

While the payment on an installment loan is the same each period,the amount applied to principal decreases each period.

A company's calculated effective borrowing rate is higher under IFRS than U.S.GAAP.

Premium amortization reduces the carrying value of the bonds.

Parrish Industries has bonds outstanding (originally sold for $4,400,000)in the amount of $5,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.At what value should it report these bonds on its balance sheet at year end?

Zhang Company,an IFRS company,sold $1,000,000 of 6%,3-year bonds on January 1,2016.The bonds pay semi-annual interest each June 30 and December 31.It cost the company $30,000 in bond issue costs. What is the effective semi-annual interest rate for the bonds?

Wilson Corp.issued $1,000,000 of 4% bonds on April 30 at par value.The bonds were dated January 1.The company pays interest on June 30 and December 31 each year.How much will the buyer need to pay the company in accrued interest?

Under U.S.GAAP,debtors in technical default may continue to classify their debt as long-term if the creditor grants a waiver before the balance sheet date.

If a company elects the fair value option for some liabilities,it must use the fair value option for all liabilities.

IFRS determines the debt component from issuing convertible bonds as the present value of the bond's future cash flows discounted at the market interest rate at the time of issuance.

The fair value option for liabilities reports unrealized gains and losses ________.

IFRS does not permit the use of the fair value option.

Clausen Corp.,an IFRS company,sold $1,000,000 of 6%,3-year bonds on January 1,2016.The bonds pay semi-annual interest each June 30 and December 31.It cost the company $32,000 in bond issue costs.Which one of the following is the correct journal entry to record the sale of the bonds?

A sinking fund is cash or other assets held in a separate bank account used to retire debt at maturity.

When bondholders decide to exercise their convertible feature,the company values the conversion at the ________.

The face value of a bond is also referred to as its par value.

Parrish Industries has bonds outstanding (originally sold for $5,400,000)in the amount of $6,000,000 with a current bond discount of $100,000.The bonds were selling at 104 on the market at its year end.What should be the balance of the Fair Value Adjustment on Bonds Payable?

Nondetachable stock warrants are in essence,convertible bonds.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters