Question 1

Describe the difference between GAAP and IFRS in accounting for bond issue costs.

Accepted Answer

GAAP requires capitalization and straigh

Question 2

When a bond sells at 102,this means the bondholder has paid $102 to acquire the bond.

Accepted Answer

A) True 
 B)False

Question 3

When bonds issued under GAAP contain a beneficial conversion option are converted,the paid-in capital - beneficial conversion feature ________.

Accepted Answer

A) remains unchanged 
B) is recorded as a loss 
C) is appropriately removed 
D) is added in full to the paid-in capital in excess of par - common 
A) remains unchanged 
B) is recorded as a loss 
C) is appropriately removed 
D) is added in full to the paid-in capital in excess of par - common

Question 4

Notes payable are formal credit arrangements that require the payment of a specified face amount of principal at a fixed maturity date.

Accepted Answer

A) True 
 B)False

Question 5

All companies capitalize bond issue costs which are amortized over the life of the bond issue.

Accepted Answer

A) True 
 B)False

Question 6

Samuel's,Inc.sold $15,000 of 6% bonds to an individual on April 1 at par value.The bonds pay interest on June 30 and December 31 each year.What are the proper entries for the sale of the bonds and the June 30 payment of the interest for these bonds?

Accepted Answer

The answer of Samuel's,Inc.sold $15,000 of 6% bonds to an...

Question 7

To compute the selling price of the bond,calculate the present value of par value using the present value of $1 ________.

Accepted Answer

A) and the interest payments using the present value of an ordinary annuity,at the market interest rate for both 
B) at the stated rate and the interest payments using the present value of an ordinary annuity at the market rate 
C) and the interest payments using the present value of an ordinary annuity,at the stated rate for both 
D) at the market rate and the interest payments using the present value of an ordinary annuity at the stated rate 
A) and the interest payments using the present value of an ordinary annuity,at the market interest rate for both 
B) at the stated rate and the interest payments using the present value of an ordinary annuity at the market rate 
C) and the interest payments using the present value of an ordinary annuity,at the stated rate for both 
D) at the market rate and the interest payments using the present value of an ordinary annuity at the stated rate

Question 8

A bond conversion option is "in the money" if the exercise price exceeds the market price of the stock.

Accepted Answer

A) True 
 B)False

Question 9

When using the fair value valuation for liabilities,a company must disclose both the issue price and the fair value of the debt.

Accepted Answer

A) True 
 B)False

Question 10

Xenia Corporation issued 3,000 term bonds with a face value of $1,000 each and no additional features for $3,200,000.The bonds' selling price indicated that the bonds were paying interest that was ________.

Accepted Answer

A) lower than the market rate 
B) the rate the bond investors wanted 
C) equal to par value 
D) higher than the market rate 
A) lower than the market rate 
B) the rate the bond investors wanted 
C) equal to par value 
D) higher than the market rate

Question 11

Financing liabilities require disclosure for all of the following except ________.

Accepted Answer

A) detailed disclosures of creditors 
B) the types and outstanding balances of debt 
C) interest rates and payment terms 
D) maturity dates and sinking fund disclosures 
A) detailed disclosures of creditors 
B) the types and outstanding balances of debt 
C) interest rates and payment terms 
D) maturity dates and sinking fund disclosures

Question 12

IFRS does not separates the convertible bond's debt and equity components.

Accepted Answer

A) True 
 B)False

Question 13

When accounting for a convertible bond issue using IFRS,any equity component is ________.

Accepted Answer

A) ignored 
B) the present value of the future cash flows 
C) measured the same as GAAP 
D) the selling price minus the debt component 
A) ignored 
B) the present value of the future cash flows 
C) measured the same as GAAP 
D) the selling price minus the debt component

Question 14

Over the life of a bond,the interest expense is the ________.

Accepted Answer

A) total cash interest payments to the bondholders 
B) difference between the selling price and the amount repaid plus interest payments 
C) difference between the selling price and the amount repaid less interest payments 
D) total cash paid to the bondholders over the life of the bonds 
A) total cash interest payments to the bondholders 
B) difference between the selling price and the amount repaid plus interest payments 
C) difference between the selling price and the amount repaid less interest payments 
D) total cash paid to the bondholders over the life of the bonds

Question 15

When bonds are issued at a discount,interest expense will be less than interest paid.

Accepted Answer

A) True 
 B)False

Question 16

U.S.GAAP always allocates proceeds from issuing convertible bonds between a debt component and an equity component.

Accepted Answer

A) True 
 B)False

Question 17

Darouich Industries decided to retire an $80,000,000 bond issue before its due date.The bonds were callable by the company at 102.At the same time,the bonds were selling at 101 on the open market.The company was able to buy $40,000,00 of the bonds at 101 and called the remaining bonds.At that time,there was $3,000,000 in the Bond Discount account and $5,000,000 in the Unamortized Bond Issue Costs accounts.Compute the gain or loss on the early extinguishment of the bonds.

Accepted Answer

A) $4,200,000 gain 
B) $6,200,000 loss 
C) $9,200,000 gain 
D) $9,200,000 loss 
A) $4,200,000 gain 
B) $6,200,000 loss 
C) $9,200,000 gain 
D) $9,200,000 loss

Question 18

The stated interest rate is also referred to as the yield rate.

Accepted Answer

A) True 
 B)False

Question 19

When the stated interest rate for bonds is lower than the market rate,the bonds will be issued at a discount.

Accepted Answer

A) True 
 B)False

Question 20

Acme Entertainment had $2,000,000 of callable bonds outstanding on December 31,2017.The ten-year bonds were issued on January 1,2010 for $2,150,000 and incurred $100,000 in bond issue costs.Acme can call the bonds at 101 anytime after January 1,2016.The company uses straight-line amortization for bond issue costs and bond premium.Acme decides to call the bonds on January 2,2018.Compute the gain or loss on early extinguishment of debt.

Accepted Answer

A) no gain or loss 
B) loss of $10,000 
C) gain of $35,000 
D) loss of $95,000 
A) no gain or loss 
B) loss of $10,000 
C) gain of $35,000 
D) loss of $95,000

Describe the difference between GAAP and IFRS in accounting for bond issue costs.

When a bond sells at 102,this means the bondholder has paid $102 to acquire the bond.

When bonds issued under GAAP contain a beneficial conversion option are converted,the paid-in capital - beneficial conversion feature ________.

Notes payable are formal credit arrangements that require the payment of a specified face amount of principal at a fixed maturity date.

All companies capitalize bond issue costs which are amortized over the life of the bond issue.

Samuel's,Inc.sold $15,000 of 6% bonds to an individual on April 1 at par value.The bonds pay interest on June 30 and December 31 each year.What are the proper entries for the sale of the bonds and the June 30 payment of the interest for these bonds?

To compute the selling price of the bond,calculate the present value of par value using the present value of $1 ________.

A bond conversion option is "in the money" if the exercise price exceeds the market price of the stock.

When using the fair value valuation for liabilities,a company must disclose both the issue price and the fair value of the debt.

Xenia Corporation issued 3,000 term bonds with a face value of $1,000 each and no additional features for $3,200,000.The bonds' selling price indicated that the bonds were paying interest that was ________.

Financing liabilities require disclosure for all of the following except ________.

IFRS does not separates the convertible bond's debt and equity components.

When accounting for a convertible bond issue using IFRS,any equity component is ________.

Over the life of a bond,the interest expense is the ________.

When bonds are issued at a discount,interest expense will be less than interest paid.

U.S.GAAP always allocates proceeds from issuing convertible bonds between a debt component and an equity component.

The stated interest rate is also referred to as the yield rate.

When the stated interest rate for bonds is lower than the market rate,the bonds will be issued at a discount.

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

Describe the difference between GAAP and IFRS in accounting for bond issue costs.

When a bond sells at 102,this means the bondholder has paid $102 to acquire the bond.

When bonds issued under GAAP contain a beneficial conversion option are converted,the paid-in capital - beneficial conversion feature ________.

Notes payable are formal credit arrangements that require the payment of a specified face amount of principal at a fixed maturity date.

All companies capitalize bond issue costs which are amortized over the life of the bond issue.

Samuel's,Inc.sold $15,000 of 6% bonds to an individual on April 1 at par value.The bonds pay interest on June 30 and December 31 each year.What are the proper entries for the sale of the bonds and the June 30 payment of the interest for these bonds?

To compute the selling price of the bond,calculate the present value of par value using the present value of $1 ________.

A bond conversion option is "in the money" if the exercise price exceeds the market price of the stock.

When using the fair value valuation for liabilities,a company must disclose both the issue price and the fair value of the debt.

Xenia Corporation issued 3,000 term bonds with a face value of $1,000 each and no additional features for $3,200,000.The bonds' selling price indicated that the bonds were paying interest that was ________.

Financing liabilities require disclosure for all of the following except ________.

IFRS does not separates the convertible bond's debt and equity components.

When accounting for a convertible bond issue using IFRS,any equity component is ________.

Over the life of a bond,the interest expense is the ________.

When bonds are issued at a discount,interest expense will be less than interest paid.

U.S.GAAP always allocates proceeds from issuing convertible bonds between a debt component and an equity component.

The stated interest rate is also referred to as the yield rate.

When the stated interest rate for bonds is lower than the market rate,the bonds will be issued at a discount.

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