Exam 10: Long-Term Liabilities

IFRS typically use a more "rule-based" approach than U.S.GAAP.

A lease is accounted for as a capital lease if the lease term is 75% or more of the property's economic life.

One example of a temporary difference between financial and tax reporting results from

Which of the following statements about bonds is correct?

Bennington Corp.issued a $40,000,ten-year bond at the face rate of 8%,paid semiannually.How much cash will the bond investors receive at the end of the first interest period?

When a bond is issued at a discount,the interest expense each year is less than the cash payment for interest.

When bonds are sold for less than the face amount,this means that the

Which of the following statements is false with respect to bonds?

Antietam Corporation Use the note on disclosure of leases for Antietam Corporation to answer the questions that follow. The Corporation leases office, warehouse and showroom space, retail stores and office equipment under operating leases, which expire no later than 2031. The Corporation normalizes fixed escalations in rental expense under its operating leases. Minimum annual rentals under noncancelable operating leases, excluding operating cost escalations and contingent rental amounts based upon retail sales, are payable as follows: Fiscal year ending March 31, 2017 \ 10,051,000 2018 11,121,000 2019 10,161,000 2020 9,063,000 2021 8,814,000 Thereafter 46,681,000 Rent expense was $12,551,000, $8,911,000, and $5,768,000 for the years ended March 31, 2016, 2015, and 2014, respectively. -Review the information for Antietam Corporation. Required (1)What are the two types of leases that a company can have? Describe each briefly. (2)Does the note disclosure show evidence of the two types of leases?

Use the information provided in the time value of money tables (Tables 9-1 through 9-4)in the text to answer the question that follows. - Global Company issued $1,000,000,8%,seven-year bonds,interest payable semiannually.The market rate of interest was 6%.The issuance price of the bonds is

On January 1,2017,Chain,Inc.issued $400,000,ten-year,10% bonds for $354,200.The bonds pay interest on June 30 and December 31.The market rate is 12%.The interest expense on the bonds at June 30,2017 is

Describe briefly how each of the following long-term liabilities arises (i.e. ,what kind of transaction produces the resulting long-term liability?)You may want to include the appropriate accounts to increase or decrease (ignore amounts)in your description. a)Long-term debt b)Deferred income taxes

Neville Company issued $100,000 of 6%,ten-year bonds when the market rate of interest was 5%.The proceeds from this bond issue were $107,732.Using the effective interest method of amortization,which of the following statements is true? Assume interest is paid annually.

The attitude of the Financial Accounting Standards Board toward deferred tax liabilities is that they are

The cash interest payment is computed annually when a bond is issued for other than its face value.For a bond issued at a discount,how will this component change as the bond approaches maturity?

The Discount on Bonds Payable account is shown on the balance sheet as a(n)

Which of the following lease conditions would result in a capital lease to the lessee?

Cash interest is computed annually when a bond is issued for other than its face value.For a bond issued at a premium,how will this component change under the effective interest method as the bond approaches maturity?

The deferred income taxes for a corporation represent

East Liberty Corp.received authorization on December 31,2017,to issue $7,000,000 face value of 6%,ten-year bonds.The interest payment dates are June 30 and December 31.All the bonds were issued at par,plus accrued interest,April 1,2018.The bonds are callable by East Liberty at any time at 102. Required Determine the impact on the accounting equation of the journal entry to record the first semiannual interest payment on the bonds at June 30,2017.