present value of an ordinary annuity of $1 at 8% for five periods is
3.99. The aircraft should be capitalized on Brown’s books at
7. Which formula should Foley use in cell E3 to calculate the bonds’
carrying amount at the end of year 2?
8. On September 1, year 1, a company borrowed cash and signed a 2year interest-bearing note on which both the principal and interest are
payable on September 1, year 3. The company did not elect the fair
value option for reporting this note. At December 31, year 2, the
liability for accrued interest should be
9. On January 1, 2000, Fox Corp. issued 1,000 of its 10%, $1,000
bonds for $1,040,000. These bonds were to mature on January 1, 2010
but were callable at 101 any time after December 31, 2003. Interest
was payable semi-annually on July 1 and January 1.
On July 1, 2005, Fox called all of the bonds and retired them.
10. The bond premium was amortized on a straight-line basis. Before
income taxes, Fox's gain or loss in 2005 on this early extinguishment
of debt was
11. An investor purchased a bond classified as a long-term investment
between interest dates at a premium. At the purchase date, the
carrying value of the bond is more than the
12. A company has outstanding accounts payable of $30,000 and a
short-term construction loan in the amount of $100,000 at year-end.
The loan was refinanced through issuance of long-term bonds after
year-end but before issuance of financial statements. How should
these liabilities be recorded in the balance sheet?
13. Bonds payable issued with scheduled maturities at various dates
are called
14. A loss contingency for which the amount of loss can be
reasonably estimated should be accrued when the occurrence of the
loss is