44. Witt Corp. has outstanding at December 31, year 1, two long-term
borrowings with annual sinking fund requirements and maturities as
follows:
45. In the notes to its December 31, year 1 balance sheet, how should
Witt report the above data?
46. On January 1, year 1, Hansen, Inc. issued for $939,000, 1,000 of
its 9%, $1,000 bonds. The bonds were issued to yield 10%. The bonds
are dated January 1, year 1, and mature on December 31, year 10.
Interest is payable annually on December 31. Hansen uses the interest
method of amortizing bond discount. In its December 31, year 1
balance sheet, Hansen should report unamortized bond discount of
47. During year 1 Cain Corporation incurred the following costs in
connection with the issuance of bonds:
48. What amount should be recorded as a deferred charge to be
amortized over the term of the bonds?
49. Reserves for contingencies for general or unspecified business
risks should
50. What amount should Pak report for professional fees expense for
the year ended December 31, year 1?
51. On March 1, year 1, a suit was filed against Dean Company for
patent infringement. Dean’s legal counsel believes an unfavorable
outcome is probable, and estimates that Dean will have to pay
between $500,000 and $900,000 in damages. However, Dean’s legal
counsel is of the opinion that $600,000 is a better estimate than any
other amount in the range. The situation was unchanged when the
December 31, year 1 financial statements were released on February
24, year 2. How much of a liability should Dean report on its balance
sheet at December 31, year 1 in connection with this suit?