Exam 14: Long Term Liabilities

A bond premium has the effect of

When bonds are sold between the interest payment dates,the issuing corporation pays to investors the interest that has accrued since the last interest payment date.

Bond issue costs have the effect of

The market interest rate is the rate that an issuer of bonds actually will have to bear and that an investor (purchaser)actually will earn over the bond's life.

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.After seven years,what is the carrying value of the bonds?

Which of the following is not considered a long-term obligation?

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

The responsibility for receiving the proper amount of interest falls on the bondholder most heavily in the case of

Which of the following statements is not true about trading on the equity?

Under a capital lease,the lessee,not the lessor,should record depreciation.

Issuing bonds at a discount has the effect of increasing interest expense above the face amount of interest.

A corporation's bondholders are the primary recipients of financial leverage.

If the market interest rate at the date of issuance of a bond exceeds the face interest rate,the bond will probably be sold at a discount.

A bond with a face value of $10,000 has a current price quote of 102.62.The price in dollars and cents is

The interest coverage ratio is expressed as a percentage.

When the effective interest method of amortization is used for a bond premium,the amount of premium to be amortized for a period is calculated by subtracting the amount of bond interest expense for the period from the amount of cash to be paid for interest for the same period.

On January 2,20x5,Fresh Inc.issued 20-year bonds payable with a face value of $1,000,000 and a face interest rate of 10 percent.The bonds were issued to yield a market interest rate of 9 percent.Interest is payable semi-annually on January 1 and July 1.In calculating the present value of the bond issue of January 2,20x5,the factor used to calculate the present value of the $1,000,000 is

The entry to record the issuance of bonds at a discount on an interest payment date should include a

Term bonds are bonds that

On January 2,20x5,Barham Corporation issued ten-year bonds payable with a face value of $400,000 and a face interest rate of 9 percent.The bonds were issued to yield a market interest rate of 10 percent.Interest is payable semiannually on January 2 and July 1.In calculating the present value of the bond issue on January 2,20x5,