Exam 14: Long Term Liabilities

Which of the following qualifies as a capital lease?

Deferred income taxes are a type of long-term liability that result from using different accounting methods to calculate income taxes on the income statement and income tax liability on the income tax return.

Unamortized Bond Premium is subtracted from Bonds Payable on the balance sheet.

The entry to record the issuance of bonds at a discount includes a credit to the Unamortized Bond Discount account.

Accounting for a defined contribution pension plan is simpler than accounting for a defined benefit plan.

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

The practice of off-balance-sheet financing is illegal.

Peng Corporation has been authorized to issue bonds with interest payment dates of March 1 and September 1.If the bonds are sold at face amount on April 1,the amount of cash to be received by the issuer is equal to the face amount of the bonds

Term bonds are

If bonds are issued at a premium,the face interest rate is

If the market interest rate is lower than the face interest rate at the date of issuance,bonds will

Comment on the change in both the carrying value and the balance of the Unamortized Bond Premium account over the life of a bond issue.

Bond certificates are issued to creditors of the issuing corporation.

Managers need to understand how long-term liabilities are

Bond issue costs

An $80,000 bond issue priced at 97 is sold for $77,600.

A company has $450,000 in bonds payable with an unamortized discount of $10,500.If two-thirds of the bonds are converted to common stock,the carrying value of the bonds payable will decrease by

When the straight-line method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by

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

On January 2,20x5,Preston 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 semi-annually on January 1 and July 1.In calculating the present value of the bond issue of January 2,20x5,the periodic interest payments to be used are