ACC 304 Week 9 Chapter 13 and Chapter 14 Quiz( All
Possible Questions)
reported as an expense in the period the bonds mature or are retired. 9) Which of the following is stated correctly?
Current liabilities follow non-current liabilities on the statement of financial position under GAAP but non-current liabilities follow current liabilities under IFRS.
debt.
IFRS does not treat debt modifications as extinguishments of
Under GAAP, bonds payable is recorded at the face amount and any premium or discount is recorded in a separate account. Under IFRS, bonds payable is recorded at the carrying value so no separate premium or discount accounts are used.
Bond issuance costs are recorded as a reduction of the carrying value of the debt under GAAP but are recorded as an asset and amortized to expense over the term of the debt under IFRS.
10) On January 1, Patterson Inc. issued $ 5,000,000, 9 % bonds for $ 4,695,000. The market rate of interest for these bonds is 10 %. Interest is payable annually on December 31. Patterson uses the effectiveinterest method of amortizing bond discount. At the end of the first year, Patterson should report bonds payable of:
11) On January 1, Martinez Inc. issued $ 3,000,000, 11 % bonds for $ 3,195,000. The market rate of interest for these bonds is 10 %. Interest is payable annually on December 31. Martinez uses the effectiveinterest method of amortizing bond premium. At the end of the first year, Martinez should report bonds payable of: ===============================================
ACC 304 Week 9 Chapter 13 and Chapter 14 Quiz( All
Possible Questions)
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