and 210,000 $1 rebates are mailed to customers. What is the rebate
expense and liability, respectively, shown on the 2007 financial
statements dated December 31?
48) A company offers a cash rebate of $1 on each $4 package of light
bulbs sold during 2007. Historically, 10% of customers mail in the
rebate form. During 2007, 4,000,000 packages of light bulbs are sold,
and 140,000 $1 rebates are mailed to customers. What is the rebate
expense and liability, respectively, shown on the 2007 financial
statements dated December 31?
49) A contingency can be accrued when
50) Mark Ward is a farmer who owns land which borders on the rightof-way of the Northern Railroad. On August 10, 2007, due to the
admitted negligence of the Railroad, hay on the farm was set on fire
and burned. Ward had had a dispute with the Railroad for several
years concerning the ownership of a small parcel of land. The
representative of the Railroad has offered to assign any rights which
the Railroad may have in the land to Ward in exchange for a release
of his right to reimbursement for the loss he has sustained from the
fire. Ward appears inclined to accept t he Railroad's offer. The
Railroad's 2007 financial statements should include the following
related to the incident:
51) Which of the following sets of conditions would give rise to the
accrual of a contingency under current generally accepted accounting
principles?
52) If bonds are issued initially at a premium and the effective-interest
method of amortization is used, interest expense in the earlier years
will be
53) An example of an item which is NOT a liability is
54) The covenants and other terms of the agreement between the
issuer of bonds and the lender are set forth in the
55) Which of the following is a correct statement of one of the
capitalization criteria?
56) Which of the following best describes current practice in
accounting for leases?
57) While only certain leases are currently accounted for as a sale or
purchase, there is theoretic justification for considering all leases to be
sales or purchases. The principal reason that supports this idea is that