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Question 1

how is the SL amort. of bond prem/disc calculated?

Answer 1

discount or premium / years til maturity or months O/S = amortization to +/- CV

Question 2

can extinguishment/refund of LTD be part of cont. op’s?

Answer 2

if it is part of the operations of the company

Question 3

how is the net CV of bond in retirement calculated?

Answer 3

*face - unam. disc - unam. issuance cost = net CV

Question 4

when is a debtor relieved of its obligation to creditor?

Answer 4

only by:

(1) paying creditor
(2) being released judicially or by creditor

Question 5

how is G/L on restructuring of payables under GAAP calc’d?

Answer 5

CV liability liquidated
- settlement amt (FV asset/equity)
= gain

*G/L on disposal/exch of asset
= FMV asset - NBV asset exch’d

Question 6

how is a gain on restructuring calc’d?

Answer 6

CV debt - undisc’d FCF

= gain on restructuring

Question 7

how do you measure a loan receivable that is impaired but foreclosure is not probable?

Answer 7

• initially, they should measure at PV expected FCF, but can expedite it by:
  (1) the loan’s observable market price OR
  (2) the FV of the collateral if loan is collateral dependent
• if foreclosure is PROBABLE, impairment MUST be measured based on FV of collateral

Question 8

how is loss on land disposal calc’d?

Answer 8

land PP - FMV land given up = loss on disposal of land

Question 9

what happens to CS O/S when TS are reissued/resold?

Answer 9

CS O/S increases

Question 10

under IFRS, what measurements are allowed to est. and report the liability for the cost of settling a lawsuit?

Answer 10

est. only best est. to settle AND discount amt’s of est’d loss to PV

Question 11

how is a form 10K filed?

Answer 11

it must be filed electronically on EDGAR unless it causes hardship for the filer

Question 12

how is WO of obsolete inv. treated in COGS?

Answer 12

it is subtracted from inventory to get COGS

Question 13

when are royalties recog’d as rev?

Answer 13

in the period earned

Question 14

when should an est. be made for the expected tax rate applicable for the full year in interim FR’ing?

Answer 14

it should be made at the end of each interim period to develop the IT provision

Question 15

is cost of market research act’s and internal costs for dvp. of computer software R+D costs?

Answer 15

no, they are not

Question 16

a fin. instrument that has uncond’l obl. that issuer must/may settle by issuing variable # of equity shares must be class’d as an AL if obl. is based solely on: (3)

Answer 16

• a fixed monetary amt known at inception
• variations in something other than FV of issuer’s equity sh’s
• variations inversely related to changes in FV of issuer’s equity shares

Question 17

what are the JE’s for bonds extinguished at/before maturity?

Answer 17

*at maturity:
Dr: B/P 1M
Cr: cash 1M

*before maturity: (early exti)

Dr: B/P 1M (face, always)
Dr: loss 72.798 (plug)
Cr: discount (unam.) 62.798
Cr: cash (redeemed) 1.01M

       Dr: B/P 1M Dr: premium 52.417
          Cr:   cash   960  Cr: gain on exting.   92.417

**also, NCV - reacq price
= gain/(loss)

Question 18

what are the add’l exp’s that a company has to accrue for payroll exp’s?

Answer 18

%401k match + employer share of FICA+medicare

Question 19

what is int. exp. under SL and effective int. method amortization for bonds?

Answer 19

I/P + amort. of disc - amort. of premium = int exp

Question 20

is the overall amort. of bonds the same for SL and effective int. methods?

Answer 20

yes, they will overall be the same over the life of the bond