Search
Info
Warning
Danger

Study Resources (Accounting)

13) Blue Corp is in the process of acquiring another business. In light of the acquisition, shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals being contemplated are detailed below: Proposal 1 Proposal 2 Estimated earnings before income.
0 Views
View Answer
36) State whether the following ratios are classified as a. ratios that measure long-term solvency, b. ratios that measure profitability, c. ratios used to analyze the company's stock as an investment, or d. ratios that measure short-term liquidity. 1. ________ Return on sales 2. ________ Earnings per share 3. ________ Dividend-yield 4. ________ Average collection period in days 5..
0 Views
View Answer
14) There are three independent situations summarized below. In all three cases the bonds are sold on January 1, 2016 and the issuing company has a December 31 year-end. In situation three, the bonds were all repurchased at par on January 1, 2020. Situation 1Situation 2Situation 3 Face value30,000,00015,000,00030,000,000 Coupon rate12%12%12% Coupon dates6/30; 12/3112/3112/31 Market.
0 Views
View Answer
8) Explain the nature of current liabilities and how these are accounted for in the financial statements. 9) Explain the meaning of the following terms: current assets, trade payables, expected value, deferred revenue and warranty. 10) For a $100,000 trade payable with terms of 2/10, net 45, how much would be reported.
0 Views
View Answer
10) Explain the meaning of financial leverage and leveraged buyout. 11) Bank Buy Inc. is in the process of acquiring another business. In light of the acquisition, shareholders are currently re-evaluating the appropriateness of the firm's capital structure (the types of and relative levels of debt and equity). The two proposals.
1 Views
View Answer
Learning Objective 12.7 Questions 1) When the PEG ratio for a stock is less than 0.5, this indicates that the A) market believes the earnings growth estimate reflected in the consensus forecast is too low. B) market expects the future EPS growth to be greater than currently reflected in the analysts' consensus forecast.
1 Views
View Answer
21) Canadian Sea Rides Ltd. issues $8,000,000 of four-year, 4% bonds dated January 1,2015. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $8,529,082 sales price less the $50,000 fee charged by Sea's lawyers. Sea's year-end is December 31. Required: Prepare entries.
0 Views
View Answer
11) Explain some of the challenges that exist in determining the amount of a "liability" by identifying factors that influence the value of the indebtedness. 12) Which of the following is correct about a "liability" under IFRS Framework? A) A future obligation arising from current events, the settlement of which is expected.
0 Views
View Answer
7) What are the reasons for issuing bonds rather than using a bank loan? 8) Why do bonds often include covenants? A) To reduce information asymmetry. B) To reduce moral hazard. C) To compensate for value-added services. D) To ensure repayment of the bond. 9) What is a "covenant"? A) Guarantee of the price to the borrower. B).
0 Views
View Answer
31) Liquidity focuses on whether there are sufficient current assets to satisfy current liabilities as they become due. 32) The quick ratio is calculated as current assets divided by current liabilities. 33) The following financial statements are available for Jerry Company: Comparative Income Statements For the Years Ending December 31, 2X13 and 2X12 2X13 2X12 Sales(all.
0 Views
View Answer
13.1   Learning Objective 1 1) What does "priority" mean? A) Higher priority confers preferential payout before lower priority claimants. B) Refers to the amount of payment that will be made upon bankruptcy. C) Lower priority confers preferential payout before higher priority claimants. D) Debtors will be paid after the equity holders if there is a.
4 Views
View Answer
12.6   Learning Objective 6 1) Jamieson Inc. issues US$1,000,000 of two-year bonds on January 1, 2017, at par that mature on December 31, 2018. The coupon rate on the bonds is 4% payable annually on December 31. Jameison's year-end is December 31. It does not accrue interest throughout the year. Exchange rates: -.
0 Views
View Answer
Learning Objective 12.6 Questions 1) Over the Top, Inc. sells one of its four swing sets. The company regularly sells seasonal outdoor furniture. How shall the gain on the sale be classified on the income statement? A) Extraordinary item B) Ordinary income C) Accounting Change D) Discontinued Operation E) Recapture 2) It is now 2X09 and Jump.
0 Views
View Answer
8) Briefly describe the difference between issued and outstanding shares. 9) Supply Company Ltd. issues a $60 million bond due in 10 years, and the bond indenture specifies that the company must set aside $6 million per year in a sinking fund so that the company will have funds to repay.
0 Views
View Answer
11.4   Learning Objective 4 1) Which statement is correct? A) Contingencies arise from future events. B) Financial guarantees arise from contracts previously entered into. C) Current liabilities arise from future events. D) The amount to be paid for financial guarantees is known or reasonably estimable. 2) Indemnities and letters of credit are examples of? A) Commitments. B) Provisions. C).
0 Views
View Answer
11.1   Learning Objective 1 1) Which of the following characteristic is required for a liability under IFRS Framework? A) A past obligation. B) A present obligation. C) An unknown obligation. D) A future obligation. 2) Which of the following characteristic is required for a liability under IFRS Framework? A) Arises from a past obligation. B) Is a present.
2 Views
View Answer
12.4   Learning Objective 4 1) Which statement is correct about the derecognition of a matured obligation? A) There will be a gain on retirement. B) There will be a loss on retirement. C) There will be no gain or loss on retirement. D) There could be either a gain or loss on retirement. 2) Which statement.
0 Views
View Answer
19) What are the three broad categories of liabilities? 20) Fill in the following chart. Initial measurement of the liability Subsequent measurement of the liability Non-financial liability Financial liability held for trading 21) Fill in the following chart. Initial measurement of the liability Subsequent measurement of the liability Non-financial liability Financial liability not held for trading .
0 Views
View Answer
3) A company is required to disclose information that enables users to evaluate the significance of financial liabilities on its financial position and performance. Required: List 8 essential aspects that disclosure over financial liabilities should cover: Answer:  a)The nature of contingent liabilities. b)A summary of the accounting policies used to determine the measurement.
1 Views
View Answer
18) For the following transaction, provide all of the required journal entries from inception to liquidation. Assume a December 31 year end and that the company does not prepare interim statements. Round all amounts to nearest dollar. Face value of note payable$200,000 Date of issue for noteMay 1, 2016 Due date for noteMay.
0 Views
View Answer
7) Offsetting is the practice of showing the net amount of related assets and liabilities on the balance sheet, rather than showing each of the components separately. State and explain the pros and cons of offsetting assets against liabilities. 8) Explain what an "in-substance defeasance" is and whether this arrangement results.
0 Views
View Answer
Learning Objective 12.5 Questions 1) Big Apple Cabins has net income of $725,000. Throughout the year, the company had 150,000 shares of common stock outstanding. Also, the company has 25,000 shares of preferred stock that pay a dividend of $5.00 per share that is convertible into 5 shares of common stock.
0 Views
View Answer
11.5   Comprehensive Questions 1) For each independent situation: ∗× 1. A former employee of Melvin Minimarket Inc. sued the company for $900,000, alleging that the company owner sexually harassed her. Melvin's lawyers suggest that the lawsuit has a 30-40% probability of success and that, if successful, the plaintiff will be awarded between.
0 Views
View Answer
47) LMZ Computer Systems Inc. maintains office equipment under contract. The contracts are for labour only; customers must reimburse LMZ for parts. LMZ's rate schedule follows: One year Two years Three years Photocopies $220 400 620 Fax machine $175 340 440 LMZ's 2018 sales of maintenance agreements is set out below: One year Two years Three years Photocopies 20 12 30 Fax machine 24 20 30 Required: Assuming that sales occurred evenly through the year: a..
0 Views
View Answer
45) RJ Magazines sells two-year magazine subscriptions for $108 cash each. The cost of producing and delivering each monthly magazine is $2.75 paid in cash at the time of delivery. RJ's sales activity for the year follows: Sales activity ?On January 1, 2017, RJ sells 22,000 subscriptions. ?On April 1, 2017, RJ sells.
0 Views
View Answer
12.1   Learning Objective 1 1) Which statement best explains the concept of "leverage"? A) A measure of the efficiency of the company. B) A measure of solvency of the company. C) A measure of the company's operations. D) A measure of the company's debt paying ability. 2) What are "non-current liabilities"? A) Obligations that are expected to.
4 Views
View Answer
38) Based on the information for the following three companies, a) compute the accounts receivable turnover ratio for each company for 2X13 and b) determine which company is in the best liquidity position based on the calculation in part a. Hadman Teltor Comdok Net credit sales 2X13 $110,000 $120,000 $200,000 2X12 120,000 99,000.
0 Views
View Answer
11.2   Learning Objective 2 1) Which statement is correct? A) HST payable is a financial liability. B) Bank overdraft is a non-financial liability. C) Unearned revenue is a non-financial liability. D) Unearned subscriptions are a financial liability. 2) Which is a non-current liability? A) HST payable. B) 45 day accounts payable. C) Five year loan that matures four months.
0 Views
View Answer
12) Fredericton Aerospace Inc. raised $5,369,210 by selling $5,000,000 of six-year, 12% bonds dated January 1, 2013. Fredericton used part of the proceeds to pay its investment bank's fee of $100,000 and related legal and accounting fees of $600,000. Interest is payable on June 30 and December 31 each year. Fredericton.
0 Views
View Answer
14) For the following transaction, provide all of the required journal entries from inception to liquidation. Assume a December 31 year end and that the company does not prepare interim statements. Round all amounts to nearest dollar. Face value of note payable$200,000 Date of issue for noteMarch 1, 2017 Due date for noteMay.
0 Views
View Answer
12.3   Learning Objective 3 1) How should non-current financial liabilities be recorded initially? A) At face value. B) At fair value. C) At fair value less transaction costs. D) At face value less transaction costs. 2) Non-current debt instruments exchanged for assets are recognized at: A) book value. B) fair value. C) cash paid. D) cash equivalents paid. 3) What is.
0 Views
View Answer
21) Cider Company has the following data: 2X13      2X12     2X11 Current Liabilities: Accounts Payable $ 50 $ 30 $ 20 Wages Payable 20 10 5 Taxes Payable 10 5 15 Current Long-Term Debt 10 15 5 Total Current Liabilities $ 90 $ 60 $ 45 Long-Term Liabilities: Long-Term Debt 35 45 40 Total Liabilities $125 $105 $ 85 Stockholders' Equity: Common Stock.
0 Views
View Answer
Learning Objective 12.4 Questions 1) Xemen Company has the following data:                               2X13         2X12         2X11 Sales $ 930 $700 Less: Cost of Goods Sold 410 235 Gross Profit 520 465 Less: Operating Expenses 284 255 Operating Income 236 210 Less: Other Revenue/Other Expense: Interest Revenue 24 24 Interest Expense (30) (30) Income before Tax 230 204 Less: Income Tax Expense 92 82 Net Income.
0 Views
View Answer
11.3   Learning Objective 3 1) Which statement about contingencies is correct? A) It involves only potential economic outflows of resources. B) It is a possible condition that depends upon the outcome of a future event. C) It involves uncertainty about either the timing or amount of payment. D) It is an existing condition that depends.
0 Views
View Answer
4) For each independent situation: 1. Langford Airport Parking Ltd. awards customers 250 reward miles per stay, in a well-known airline mileage program. Langford pays the airline $0.06 for each mile. Langford, which is not an agent for the airline, estimates that the fair value of the miles is the same.
1 Views
View Answer