in the amount of $10,000,000 (matures in March 2018). Management
has stated its intention to refinance the 12% debt whereby no portion of
it will mature during 2018. The date of issuance of the financial
statements is March 25, 2018. (a)Is management's intent enough to
support long-term classification of the obligation in this situation?
(b)Assume that Dumars Corporation issues $13,000,000 of 10-year
debentures to the public in January 2018 and that management intends to
use the proceeds to liquidate the $10,000,000 debt maturing in March
2018. Furthermore, assume that the debt maturing in March 2018 is paid
from these proceeds prior to the issuance of the financial statements.
Will this have any impact on the balance sheet classification at
December 31, 2017? Explain your answer. (c)Assume that Dumars
Corporation issues common stock to the public in January and that
management intends to entirely liquidate the $10,000,000 debt maturing
in March 2018 with the proceeds of this equity securities issue. In light
of these events, should the $10,000,000 debt maturing in March 2018 be
included in current liabilities at December 31, 2017? CA14-1 (Bond
Theory: Balance Sheet Presentations, Interest Rate, Premium) On
January 1, 2017, Nichols Company issued for $1,085,800 its 20-year,
11% bonds that have a maturity value of $1,000,000 and pay interest
semiannually on January 1 and July 1. The following are three
presentations of the long-term liability section of the balance sheet that
might be used for these bonds at the issue date. Instructions (a)Discuss
the conceptual merit(s) of each of the date-of-issue balance sheet
presentations shown above for these bonds. (b)Explain why investors
would pay $1,085,800 for bonds that have a maturity value of only
$1,000,000. (c)Assuming that a discount rate is needed to compute the
carrying value of the obligations arising from a bond issue at any date
during the life of the bonds, discuss the conceptual merit(s) of using for
this purpose: CA14-4 WRITING (Off-Balance-Sheet Financing) Matt
Ryan Corporation is interested in building its own soda can
manufacturing plant adjacent to its existing plant in Partyville, Kansas.
The objective would be to ensure a steady supply of cans at a stable
price and to minimize transportation costs. However, the company has
been experiencing some financial problems and has been reluctant to