Exam 11: Long-Term Liabilities

A corporation probably does not know who owns its registered bonds.

All of the following are operating leases except a

Bond issue costs have the effect of increasing a premium,or reducing a discount,on bonds issued.

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments plus the premium.

A $200,000 bond issue with a carrying value of $206,000 is called at 101 and retired.The entry to record the retirement of bonds is:

When the effective interest method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by multiplying the

On January 2,20x5,McGowan Corporation issued 20-year bonds payable with a face value of $300,000 and a face interest rate of 8 percent.The bonds were issued to yield a market interest rate of 9 percent.Interest is payable annually on January 2.In calculating the present value of the bond issue of January 2,20x5,the

Bond issue costs

The carrying value of a bond issued at a premium is calculated at any given point in time by adding the balance of the unamortized premium to the bond's face value.

When bonds are issued at a discount,the total interest cost of the bonds over the life of the bonds is equal to the amount of the

The effective interest method of amortization of bond premiums and discounts is superior to the straight-line method because it results in a(n)

A bond discount is a component of interest cost because it represents the amount in excess of the issue price that a corporation must pay on the maturity date.

The matching rule dictates that both the accrued interest and the amortization of a premium or discount be recorded at the year end.

The most common type of long-term debt is a

Suffolk Corporation issued $92,000 of 20-year,6 percent bonds at 98 on one of its semiannual interest dates.The straight-line method of amortization is to be used.The entry to record the bond interest expense on the next interest payment date is: .

The calculation of cash for interest to be paid each interest period in connection with a bond payable is not influenced by any premium or discount upon issuance.

Bond issue costs have the effect of

Pelican Company issued $200,000 of 20-year,6 percent bonds at 98 on one of its semiannual interest dates.The straight-line method of amortization is to be used. -What is the total interest cost of the bonds?

On March 1,20x5,King Corp.sold 102 of its 9 percent,$1,000 bonds for a price of 102 plus accrued interest.The accrued interest amounted to $800.If a balance sheet were to be prepared at the end of the day,March 1,20x5,the carrying value reported for the bonds payable would be

When the effective interest method of amortization is used,the amount of bond interest expense for a given period is calculated by multiplying the face interest rate by the bond's carrying value at the beginning of the given period.