mail in the rebate form. During 2007, 6,000,000 packages of batteries
are sold, 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? 49) A contingency can be accrued when
50) Which of the following sets of conditions would give rise to the
accrual of a contingency under current generally accepted accounting
principles? 51) Mark Ward is a farmer who owns land which borders on
the right-of-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 the Railroad's offer. The Railroad's 2007 financial
statements should include the following related to the incident: 52) An
example of an item which is NOT a liability is 53) The covenants and
other terms of the agreement between the issuer of bonds and the lender
are set forth in the 54) Bonds for which the owners' names are NOT
registered with the issuing corporation are called 55) Minimum lease
payments may include a 56) What impact does a bargain purchase
option have on the present value of the minimum lease payments
computed by the lessee? 57) Which of the following is a correct
statement of one of the capitalization criteria? 58) In order to properly
record a direct-financing lease, the lessor needs to know how to
calculate the lease receivable. The lease receivable in a direct-financing
lease is best defined as 59) In the earlier years of a lease, from the
lessee's perspective, the use of the 60) In a lease that is appropriately
recorded as a direct-financing lease by the lessor, unearned income
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ACC 422 Final Exam Guide 3