Info
Warning
Danger

Study Resources (Accounting)

10-1 Reporting and Analyzing Liabilities CHAPTER 10 REPORTING AND ANALYZING LIABILITIES TRUE-FALSE STATEMENTS               1.A current liability must be paid out of current earnings.               2.If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.               3.Current liabilities are expected to be.
13 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 236 On March 1, 2014, Geoffrey Company acquired real estate, on which it planned to construct a small office building, by paying $85,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were sold for $2,200. Additional.
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities MULTIPLE CHOICE QUESTIONS               67.Liabilities are classified on the balance sheet as current or a.              deferred. b.              unearned. c.              long-term. d.              accrued.               68.Most companies pay current liabilities a.              out of current assets. b.              by issuing interest-bearing notes payable. c.              by issuing stock. d.              by creating long-term liabilities.               69.A current liability is a debt that can reasonably.
7 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets BRIEF Exercises Be. 222 Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____1.  Parking lots _____2.  Electricity used by a machine _____3.  Excavation costs _____4.  Interest on building construction loan _____5.  Cost of trial runs for.
14 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets IFRS QUESTIONS               1.As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation? a.The method used to ensure that the depreciation.
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities 81.              West County Bank agrees to lend Drake Builders Company $200,000 on January 1. Drake Builders Company signs a $200,000, 6%, 6-month note. What is the adjusting entry required if Drake Builders Company prepares financial statements on March 30? a.              Interest Expense6,000               Interest Payable6,000 b.              Interest Expense6,000               Cash6,000 c.              Interest.
8 Views
View Answer
10-1 Reporting and Analyzing Liabilities 171.The statement "Bond prices vary inversely with changes in the market rate of interest" means that if the a.              market rate of interest increases, the contractual interest rate will decrease. b.              contractual interest rate increases, then bond prices will go down. c.              market rate of interest decreases, then bond prices.
8 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets S-A E 296 Goodwill is an unusual asset in that it cannot be sold individually apart from a business as a whole. If goodwill is an intangible asset, why can't it be sold like other intangible assets such as copyrights and patents? Briefly explain what makes goodwill.
10 Views
View Answer
10-1 Reporting and Analyzing Liabilities               71.Failure to record a liability will probably a.              result in an overstated net income. b.              result in overstated total liabilities and owner’s equity. c.              have no effect on net income. d.              result in understated total assets.               72.Very often, failure to record a liability means failure to record a(n) a.              revenue. b.              asset.
8 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets *Ex. 262 Railsback Company purchased a machine on January 1, 2014, at a cost of $72,000. The machine is expected to have an estimated salvage value of $4,000 at the end of its 5-year life. The company capitalized the machine and depreciated it in 2014 using the.
12 Views
View Answer
10-1 Reporting and Analyzing Liabilities 51.              The classification of a liability as current or noncurrent is important because it may affect the evaluation of a company’s liquidity.               52.The debt to assets ratio measures the percentage of the total assets provided by creditors.               53.The times interest earned is computed by dividing net income.
8 Views
View Answer
10-1 Reporting and Analyzing Liabilities 11.              With an interest-bearing note, the amount of cash received upon issuance of the note generally exceeds the note's face value.               12.Interest expense on a note payable is only recorded at maturity.               13.Current maturities of long-term debt refers to the amount of interest on a note payable.
9 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Be. 226 Equipment was acquired on January 1, 2010, at a cost of $75,000. The equipment was originally estimated to have a salvage value of $5,000 and an estimated life of 10 years. Depreciation has been recorded through December 31, 2013, using the straight-line method. On January.
12 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 253 Nelson Company, organized in 2014, has these transactions related to intangible assets in that year: Jan.2Purchased a patent (5-year life) $325,000. Apr.1Goodwill purchased (indefinite life) $360,000. July1Acquired a 9-year franchise; expiration date July 1, 2023, $720,000. Sept.1Research and development costs $185,000. Ex. 253(Cont.) Instructions (a)Prepare the necessary entries to record these intangibles..
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities 141.Bonds are not always categorized as a.              callable or convertible. b.              term or serial. c.              secured or unsecured. d.              secured or debenture. 142.Which of the following statements concerning bonds is not a true statement? a.              Bonds are generally sold through an investment company. b.              The bond indenture is prepared after the bonds are printed. c.             .
7 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets SHORT-ANSWER ESSAY QUESTIONS S-A E 289 In general, how does one determine whether or not an expenditure should be included in the acquisition cost of property, plant, and equipment? S-A E 290 How is the cost for a plant asset measured in a cash transaction? In a noncash transaction? S-A E.
11 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets               271.The book value of a plant asset is obtained by subtracting ______________ from the ______________ of the plant asset.               272.Three factors that affect the computation of periodic depreciation expense are (1) _______________, (2) _______________, and (3) _________________.               273.The ________________ method of computing depreciation expense results.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets MATCHING Set 1 287.Match the items below by entering the appropriate code letter in the space provided. A.Plant assetsF.Units-of-activity method B.DepreciationG.Double-declining-balance method C.Book valueH.MACRS D.Salvage valueI.Revenue expenditures E.Straight-line methodJ.Capital expenditures ____              1.Small expenditures which primarily benefit the current period. ____              2.Cost less accumulated depreciation. ____              3.An accelerated depreciation method used for financial statement purposes. ____              4.Tangible resources.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Exercises Ex. 234 For each entry below make a correcting entry if necessary. If the entry given is correct, then state "No entry required." (a)The $70 cost of repairing a printer was charged to Equipment. (b)The $5,500 cost of a major engine overhaul was debited to Maintenance and Repairs Expense..
10 Views
View Answer
10-1 Reporting and Analyzing Liabilities 121.The following totals for the month of April were taken from the payroll records of Metz Company. Salaries$30,000 FICA taxes withheld2,295 Income taxes withheld6,600 Medical insurance deductions1,200 Federal unemployment taxes240 State unemployment taxes1,500 The entry to record the accrual of federal unemployment tax would include a a.              credit to Federal Unemployment Taxes Payable for $240. b.             .
8 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 240 (a)Faster Company purchased equipment in 2007 for $104,000 and estimated an $8,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2013, there was $67,200 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets *Ex. 261 Mideast Airlines purchased a 777 aircraft on January 1, 2012 at a cost of $40,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $6,000,000. Instructions Compute the accumulated depreciation and book value at December 31, 2014 using the straight-line.
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities 91.              Interest expense on an interest-bearing note is a.              always equal to zero. b.              accrued over the life of the note. c.              only recorded at the time the note is issued. d.              only recorded at maturity when the note is paid.               92.Sales taxes collected by a retailer are recorded by a.              crediting.
15 Views
View Answer
10-1 Reporting and Analyzing Liabilities 161.If bonds are issued at a premium, the stated interest rate is a.              higher than the market rate of interest. b.              lower than the market rate of interest. c.              too low to attract investors. d.              adjusted to a higher rate of interest. 162.The present value of a $10,000, 5-year bond, will be.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets *Ex. 257 Redeker Company purchased equipment on January 1, 2013, for $90,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. Instructions Answer.
10 Views
View Answer
10-1 Reporting and Analyzing Liabilities *61.The effective-interest method produces a constant dollar amount of interest expense to be reported each interest period.               *62.When there are material differences between the results of using the straight-line method and using the effective-interest method of amortization, the effective-interest method should be used.               *63.In a monthly mortgage.
10 Views
View Answer
10-1 Reporting and Analyzing Liabilities 21.              Metropolitan Symphony sells 200 season tickets for $40,000 that includes a five-concert season. The amount of Unearned Ticket Revenue after the third concert is $24,000.               22.The contractual interest rate is always equal to the market rate of interest on the date that bonds are issued.               23.Each.
7 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 245 Phill Co. has equipment that cost $50,000 and has been depreciated $30,000. Instructions Record entries for the disposal under the following assumptions. (a)It was scrapped as having no value. (b)It was sold for $23,000. (c)It was sold for $18,000. Ex. 246 Here are selected 2014 transactions of Howe Corporation. Jan.     1Retired a piece.
11 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 242 a.     A machine that cost $36,000 and on which $26,500 of depreciation had been recorded was disposed of for $10,200. Indicate whether a gain or loss should be recorded, and for what amount. b.     Assume that the machine of Part a, above, was instead.
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities 131.If a corporation issued $8,000,000 in bonds which pay 5% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%? a.              $4,000,000 b.              $120,000 c.              $400,000 d.              $280,000 132.Secured bonds are bonds that a.              are in the possession of a bank. b.              can be converted.
7 Views
View Answer
10-1 Reporting and Analyzing Liabilities 151.The contractual interest rate on a bond is often referred to as the a.              callable rate. b.              the maturity rate. c.              market rate. d.              stated rate.               152.If the market interest rate for a bond is higher than the stated interest rate, the bond will sell at a.              a premium. b.              a discount. c.              par. d.             .
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Set 2 288.Match the items below by entering the appropriate code letter in the space provided. A.Gain on disposalF.Return on assets ratio B.Loss on disposalG.Goodwill C.TrademarkH.Amortization D.Capital leaseI.Intangible asset E.Asset turnover ratioJ.Research and development costs ____              1.Process of allocating the cost of an intangible asset to expense over its useful life. ____              2.Is recorded.
9 Views
View Answer
10-1 Reporting and Analyzing Liabilities 41.              If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.               42.If the market rate of interest at the date of issuance of a bond is greater than the stated interest rate, the bond will be issued.
9 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 249 (a)A company purchased a patent on January 1, 2014, for $2,500,000. The patent's legal life is 20 years but the company estimates that the patent's useful life will only be 5 years from the date of acquisition. On June 30, 2014, the company paid legal.
12 Views
View Answer
10-1 Reporting and Analyzing Liabilities 101.On January 1, 2014, Keisler Company, a calendar-year company, issued $700,000 of notes payable, of which $175,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2014, is a.              Current liabilities, $700,000. b.              Long-term debt, $700,000. c.              Current liabilities,.
9 Views
View Answer
10-1 Reporting and Analyzing Liabilities 181.If bonds have been issued at a discount, then over the life of the bonds the a.              carrying value of the bonds will decrease. b.              carrying value of the bonds will increase. c.              interest expense will increase, if the discount is being amortized on a straight-line basis. d.              unamortized discount will.
7 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 251 For each of the following unrelated transactions, (a) determine the amount of the amortization for the current year, and (b) present the adjusting entries required to record amortization at year end. (1)Costs (it was not acquired) of $39,000 were incurred on January 1 to obtain a.
9 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 255 Jensen Company purchased a new machine on October 1, 2014, at a cost of $104,000. The company estimated that the machine has a salvage value of $8,000. The machine is expected to be used for 80,000 working hours during its 8-year life. Instructions Compute depreciation using the.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 238 Mike Geary, the controller of Shellhammer Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2014. Here are his findings: Type of Asset Date Acquired Cost Accumulated Depreciation, Jan. 1, 2014 Useful Life (in Years) Salvage Value Old Proposed Old Proposed Building Jan. 1, 2006 $2,700,000 $516,000 40 50 $120,000 $84,000 Warehouse Jan. 1, 2009      240,000     46,000 25 20  .
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities 191.The current carrying value of Kennett’s $600,000 face value bonds is $597,750. If the bonds are retired at 102, what would be the amount Kennett would pay its bondholders? a.              $597,750 b.              $600,000 c.              $603,000 d.              $612,000 192.Ervay Company has $875,000 of bonds outstanding. The unamortized premium is $12,600. If the company.
12 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets               281.An overall measure of profitability is the ______________________ ratio.               282.The _______________ ratio is calculated by dividing net sales by average total assets.               283.The process of allocating to expense the cost of an asset over its useful life is called __________________ for tangible plant assets and.
11 Views
View Answer
10-1 Reporting and Analyzing Liabilities 31.              A $150,000 bond with a quoted priced of 102 ¼ is sold for $153,375.               32.If a bond has a stated value of $1,000 and a contractual interest rate of 6 percent, then the interest paid annually will be $60.               33.The current market value of a bond.
9 Views
View Answer
10-1 Reporting and Analyzing Liabilities 111.Tina's Boutique has total receipts for the month of $24,255 including sales taxes. If the sales tax rate is 5%, what are Tina's sales for the month? a.              $23,043 b.              $23,100 c.              $24,255 d.              It cannot be determined. 112.Dominic's Salon has total receipts for the month of $30,210 including sales taxes. If.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 247 Forcum Company reports the following information (in millions) during a recent year: net sales, $12,408.5; net earnings, $344.9; total assets, ending, $4,312.6; and total assets, beginning, $4,254.3. Instructions (a)Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin ratios. (b)Prove mathematically how the profit margin.
14 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets *Ex. 259 Tony’s, a popular pizza hang-out, has a thriving delivery business. Tony’s has a fleet of three delivery automobiles. Prior to making the entry for this year's depreciation expense, the subsidiary ledger for the fleet is as follows: Accumulated EstimatedDepr.—Beg.Miles Operated Car   CostSalvage ValueLife in Milesof the Year .
9 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Ex. 244 Vineyard Company sold the following two pieces of equipment in 2014: Equipment A Equipment B Cost$116,000$63,000 Purchase date7/1/101/1/11 Useful life8 years5 years Salvage value$4,000$3,000 Depreciation methodStraight-lineStraight-line Date sold7/1/149/1/14 Sales price$49,000$20,000 Instructions Journalize all entries required to update depreciation and record the sales of the two assets in 2014. The company has recorded depreciation on the.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets COMPLETION STATEMENTS               264.The _______________ price is equal to the fair market value of the asset given up or the fair market value of the asset received.               265.With the exception of land, plant assets experience a ______________ in service potential over their useful lives.               266.When vacant land.
8 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets Be. 230 For each item listed below, enter a code letter in the blank space to indicate the allocation terminology for the item. Use the following codes for your answer: A—AmortizationD—DepreciationN—None of these ____              1.Copyrights6.Research and Development Costs ____              2.Land_              7.Equipment ____              3.Buildings              8.Franchises ____              4.Patents              9.Annual licensing fees ____              5.Trademarks10.Land Improvements Be. 231 Using.
10 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets S-A E 298(Communication) The Old Fix-It is a company specializing in the restoration of old homes. To showcase its work, the company purchased an old Victorian home in downtown Pittsburg, Kansas on January 2, 2010. The original home was purchased for $125,000. A new heating and air-conditioning.
11 Views
View Answer
9-1 Reporting and Analyzing Long-Lived Assets S-A E 293 Identify the factors that are considered in classifying an expenditure as a capital or a revenue expenditure. Are there instances where it may be difficult to classify an expenditure as one or the other (e.g., the purchase of a wastebasket that has a useful.
15 Views
View Answer

Welcome Back!

ScholarOn has more then 20 Million answers, flashcards & more being added everyday!

or
Forgot?
Login
Don't have an account? Signup

Join ScholarOn

ScholarOn has more then 20 Million answers, flashcards & more being added everyday!

or
Signup
By registering, I agree to the Terms and Privacy Policies
Already have an account? Log in

Verify Your Email

Check your inbox & click on the link to activate your account.

Resend Email
Verification Mail Send Successfully. Please Check Your Email.

Forgot Password

Please enter your registered email to recieve the password reset link.

Send reset link
Already have an account? Log in
Did you know?

ScholarOn has more than 2 Million+ answers, textbook solutions & flashcards. Explore Now!

Let us boost your grade together!