Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Financial Accounting Reporting > NONCURRENT LIABILITIES > Flashcards

NONCURRENT LIABILITIES Flashcards

1
Q

Calc, the amount should fine report as a liability for accrued interest at Dec 31, year 4?

A

Step 1 - Calc the First year interest for the 12 months

Step 1
Borrowed 10,000
note bearing interest 12% (10,000 x 12%)

1st year interest 1,200

Step 2
Borrowed 10,000
1,200
11,200
12%
10
12

the accrued interest for the next 10 months 1,120
March 1 Year 3 - Dec 31, Year 4

Step 3

                        1st year interest 1,200  Accrued interest for 10 months   1,120  Accrued interest                              2,320
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Calc, the long term liabilities of the bond?

A

Step 1
face value 500,000
Present value of $1 five periods
0.7129860

                                                     356,493.00

Step 2
face value 500,000
PV of the 5 annual payments 8%

                                                           40,000

Step 3
face value 40,000
PV of oridinary annuity of $1, five periods
4.1002

                                                      164,008

Step 4 add the
356,493
164,008

long term liabilities 520,501

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Calc, whether the trouble debt restructuring gain or loss?

A

Gross Receivable 100,000
Allowance for credit loss 25,000

The receivable transferred is 75,000

Part 2

Gross Receivable 100,000
The receivable transferred 75,000

Gain on restructuring 25,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Calc, the total equity net increase of trouble debt restructuring?

A

Journal entries

debt trouble debt restructuring 1,200,000

                                   credit cash 400,000 
       credit gain on net increase 800,000
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Are bonds carrying amount and Retained earnings affected by error occurred on bonds premium which they incorrectly used the straight line method?

A

No effect on either bonds carrying amount or retained earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

When a bond retirement paid exceeded the carrying amount is that an loss or gain?

A

This is a loss in continuing operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Calc, the accretion expense to the asset retirement obligation?

A

ARO 100,000 x interest rate 10% = 10,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How should sinking funds be reported in classified Balance Sheet?

A

the entire balance in the sinking fund account should apear as noncurrent asset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Calc, the amount bond liability should be reported?

A

1000 bonds x 1000 face value x .99 = 990,000
paid bond issued costs 35,000

Bond Liability 955,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

calc, the issue expense that should be reported in the income statement?

A

incurred costs 3,300 x 4 x 55 months = 240 straight line amortization

4 is for the April 1, year 1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Calc, the interest expense that should be reported for the bond?

A

Issued 300,000
Interest 8%
June 1 7/12

= Interest expense 14,000

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Calc, the acquisition cost for the frachisee?

A

periodic payment 40,000
times PV FACTOR 2.91
PV OF PERIODIC PAYMENTS 116,400
PLUS DOWN PAYMENT 80,000
PV OF FRACHISEE FEE 196,400.0

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is debendture bonds?

A

unsecured bond

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a serial bond?

A

mature in installments at various dates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Examples of Serial bonds?

A

Registered bonds & Commodity bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Examples of Debenture bonds?

A

Registered bonds & convertible bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Calc, the total amount term bonds?

A

Registered Debentures 700,000
Collateral Trust Convertible 600,000

Registered and collateral are examples of debentures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Example if a machinery payment is due when it was purchased what kind of Present value concept is appropriate?

A

Present value of an annuity due of $1 for 5 periods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Example of Present value of $1

A

On September 1, Year 1 purchased a new machine and payment is due on September 1, year 3

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

If there is a semi-annually payments what periods?

A

increases

for an examples 20 years compound to 40 instead

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Calc, the interest rate implicit in the lease?

A

Start off with the cost to purchase the equipment of 15,192 - payments made 4,000 = 11,192 / 4,000 = 2.798

The implicit lease is 16%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Calc, the acquisition cost of an a franchise?

A

periodic payment 40,000
times PV annuity 2.910

PV of periodic payments 116,400
plus 80,000

PV of franchise fee 196,400

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Calc, the accumulated in 2 years using the PV of $1 discounted rate of 10%?

A

10,000 / .826 = 12,107

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

When the market rate is greater than stated rate, how is the bond issued?

A

it’s a discount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
When the market rate is less than the stated rate, how is the bond issued?
it's a premium
26
When the market and stated rate are the same the bond, how is the bond issued?
the bond is issued face value
27
If the bond are issued between interest rates, what will the bond holder do?
then the bond holder will pay the accrued interest and receive the full interest amount the next interest payment date
28
Calc, the interest payable for the balance sheet?
Issued price 800,000 x 8% stated rate 3/12 = 16,000 is the interest payable
29
Calc, the annual stated interest rate for the debenture bonds?
Look for how much interest payment is made and that will help you start off the problem 12,000 interest semi annually x 2 24,000 / 200,000 debenture bonds
30
The entry the company should use to record the original issued of a bond. Using the information Issused bond at 98 with maturity 50,000
Debt - Cash 49,000 50,000 x .98 Bond Discount 1,000 Credit - Bond Payable 50,000
31
Bond interest expense is figure out how?
When the bond was issued so June 1, Year 4 and the interest expense for the year ended is the period Dec 31st 7 Months would be the Remember Bond interest expense we start the count from the point where the bond was issued
32
Calc, the accrued interest payable report on balance sheet?
start off with the bond issued 300,000 x 12% x 6/12 = 18,000 The reason it's 6/12 because the interest paid is semiannually mentioned on the problem next we 9000 x 3/6 = 18,000 Interest paid from July 1 - Sept 30 18,000 x 3/6 = 9000
33
Calc, the payable semiannually bond received bond issuance?
Part 1 600,000 issued x 1,000 bond x .99 accrued interest = 594,000 bond proceeds Part 2 600,000 issued x 10% * 3 /12 we are including the accured interest 15,000 accrued interest Part 3 Here we will start off with 594,000 + 15,000 = 609,000
34
Calc, the accured interest payable for the note"?
Step 1 calc the CV 3,600,000 note - 1,200,000 first payment = 2,400,000 Step 2 calc the accured interest payable 2,400,000 x 10% x 9/12 = 180,000 The 9/12 is bc the first payment was made on OCT 1 year 2 - June 30 year 3
35
Calc, the proceeds on the sale of the bond?
800,000 issued PART 1 0.675560 540,448 800,000 PART 2 10% 6 12 40000 SEMI ANNUAL INTEREST PAYMENTS 40000 8.11090 324,436 864,884 PART 3
36
When the accrued interest is 97 what is this discounts or premium or face value?
Discount
37
When the accrued interest is 100 what is this discounts or premium or face value?
face value
38
When the accrued interest is 105 what is this discounts or premium or face value?
Premium
39
calc, the bonds payable at a discount?
So bond is issued at 400 x 1000 bonds x 97 = 388,000
40
If a 5 year bond was issued on Jan 1, year 1 at a discount. What will happen to the carrying amount on Dec 31, year 2?
The CV goes up
41
Good rule for discounts bonds
are everything goes up CV, interest Expense,
42
On a discounted bond when interest expense, what are the general entries and?
Interest Expense is greater than the discount and cash Examples of entries mentioned below (Interest paid for Y1 )Debit Interest Expense 7361 Credit Discount 1361 Cash 6000
43
Calc, the unamortized premium bond reported for the balance sheet year 4?
Carrying amount 105,000 x 6% market rate = 6,300 Face Amount 100,000 x 7% stated rate = 7000 = 7000 - 6300 = 700 Premium Amortized 5000 - 700 = 4300 unamortized premium
44
Calc, the bonds payable on the bond discounts?
So we start off with the face amount 500,000 x 9% x 6/ 12 = 22,500 Next we use the Carrying amount 469,500 x 10% * 6 /12 = 23,475 23,750 - 22,500 = 975 Carrying amount 469,500 + 975 = 470,475 bond payable
45
Calc, the interest expense for the bond premium?
Using the Carrying amount of 103,288 x 10% market rate x 6/ 12 = 5,164
46
Calc, the unamortized discounts bond reported for the balance sheet for the year?
For year 1 Start off with the Carrying amount which is 939,000 x yield rate 10% = 93,900 Next we start off with the face value 1,000,000 x 9% = 90,000 93,900 - 90,000 = 3,900 Final step is to calc the subtract the discount unamortized 61,000 - 3900 = 57,100
47
calc the amount that is received upon issuing the bonds?
the carrying amount 363,600 - 3,600 amortized discount = 360,000
48
How to calc the bonds interest payable?
By using the face value of the bond at the beginning of the period by the contracual interest rate (Stated rate)
49
How to calc the bonds interest expense?
Carrying amount of the bond mutiplied by the effective interest rate ( Market rate)
50
calc, the interest expense for year 2?
for interest expense for using the carrying amount x by the effective interest rate step 1 Carrying amount is 96,207 x 10% = Interest expense of 9621 for year 1 so now we need to calc the new carrying amount for year 2 So we use the interest expense of 9,621 - 9000 the cash paid (face value of 100,000 x 9% = 9000) 9,621 - 9000 = 621 discount amortized next we add the 621 with the prior year Carrying amount and we get a new carrying amount of 96,828 Step 2 - with the new carrying amount 96,828 x 10% = 9,683 interest expense for year 2
51
Calc, the Carrying amount of bond for year 8?
We just multiply the issued 1000 x 1000 = 1,000,000 and next we add the unamortized premium of 14,000 = 1,014,000
52
calc, the bond liability issued for a discount?
Start of with 1000 issued x 1000 face value x 99 = 990,000 Step 2 add the face value - discount - Bond issued cost (BIC) 1,000,000 Face value 10,000 Discount 35,000 Bond issued cost = 955,000 net bond liability
53
calc, the issued expense dixon should report on the income statement for year end Dec 31, year 1?
incurred cost 3,300 x 4 x 55 months
54
Calc, the gain before income taxes on redemption of bonds?
\\\step 1 face value 5,000,000 premium 30,000 bond issued costs 50,000 4,980,000 Step 2 face value 5,000,000 open market rate 0.98 4,900,000 STEP 3 4,900,000 4,980,000 80,000
55
Calc, the carrying amount that computing gain or loss on retirement of debt?
BOND ISSUED COSTS 6000 YEARS 15 AMORTIZED ISSUED COST 400 AMORTIZED ISSUED COST 400 5 2000 FACE VALUE 250,000 UNAMORTIZED COST 2000 DEFERRED COST ISSUED COSTS 248,000
56
Using the straight line method, calc, the gain or loss for the early extinguishment?
Step 1 - calc the cost of extinguishment 1000 x 1000 = 1,000,000 x 1.01 = 1,010,000 Step 2 - 1,040,000 - 1,000,000 = 40,000 Step 3 40,000 x 11/20 = 22,000 Step 4 1,040,000 - 22,000 = 1,018,000 Step 5 1,018,000 - 1,010,000 cost of extingushment = 8,000 gain
57
Calc, loss on extinguishment of debt on the income statement?
Step 1 - calc the Carrying amount of bond 8,000,000 face value 430,000 7,570,000 carrying amount Step 2 - calc how much of the bond actually retired 8,000,000 / 4,000,000 = 50% Step 3 - Income statement as loss on extinguishment debt Unamortized debt 430,000 x 50% = 215,000 + 100,000 = 315,000 income statement loss on extinguishment
58
Calc, note payable for the balance sheet?
Step 1 calc the present value of the note issued Note payable 10,000 Present Value. .944 = Present Value 9,444 Step 2 - annual rate of 3% Note Payable 10,000 Annual rate 3% Present Value .944 9 months bearing 9/12 = 212.4 = 9,444 + 212.4 = 9,652
59
Calc, the liability for accrued interest for the note?
Step 1 CALC THE Y1 INTEREST FACE VALUE 10,000 NOTE BEARING 12% INTEREST 1200 STEP 2 - CALC THE REMAINING INTEREST EXP FACE VALUE 10,000 1200 12% 10/12 11,200 1120 ACCRUED INTEREST LIABILITY 2320 (1200 + 1120)
60
Calc, the interest expense on the income statement interest bearing note instead of noninterest bearing note?
Step 1 - calc the note payable building 400,000 face value x 0.79 = 316,000 316,000 x 0.08 = 25,280 interest expense Step 2 - Note bearing 250,000 x 0.79 = 197,500 + 15,000 x 2.58 = 236,200 Step 3 - Interest expense 236,200 x 8% = 18,896 interest expense 25,280 - 18,896 = 6,384 decrease
61
Calc, the accrued interest payable for the note payable?
Federal amount of 900,000 - annual principal payments 300,000 = 600,000 face amount Next we will face amount 600,000 x 12% stated interest rate x 4 /12 = 24,000 accrued interest payable
62
Calc, the note payable that needs to be reported?
Calc the monthly interest rate 12% / 12 months = 1% Face value 500,000 x 1% = 5000 Payment of 11,122 - 5000 = 6,122 reduce the note outstanding balance 500,000 - 6,122 = 498,878 note payable equal 493,878 x 1% = 4,939 11,122 payment - 4,939 = 6,183 payment was reduced by the outstanding balance 493,878 - 6,183 = 487,695 note payable balance for the year 2
63
Calc, the amount that should be reported as a gain from debt restructuring on the income statement?
Face value 500,000 + unpaid interest 75,000 = 575,000 575,000 - 410,000 cash payable = 165,000
64
Calc, the impact of the transaction of anchor net income
So if the gross receivable is 100,000 - 25,000 credit loss = 75,000 which is recognized as a gain on restructuring of payable
65
Calc, the gain on the troubled debt restructured agreement.
Carrying amount of 185,000 - 120,000 fair value = 65,000 gain on restructuring Step 2 Fair Value 120,000 Carrying Amount 85,000 = gain on restructuring 35,000 65,000 + 35,000 = 100,000
66
calc, the loss of the Fair Value of land?
So the bank and debtor exchanged asset and funds so the Notes payable of 400,000 was paid bank 179,000 annual payments and also subtract 89,000 = 400,000 - 179,000 - 89,000 = 310,000 500,000 - 310,000 = 190,000
67
calc the issued price for the 1000 bond? Stated interest rate 6% Yield interest rate 9%
1000 x 0.422 = 422 1000 x 6% x 6.418 = 385 422 + 385 = 807
68
Calc, the asset retirement obgliation for the balance sheet?
Begin balance 257,000 New ARO (FV) 68,000 Partial settlement (87,000) accretion exp. 26,000 Ending balance 264,000
69
An entity most likely account for an asset retirement obligation ARO by
recognized the FV of the liability using an expected present value technique
70
Calc, the interest implicit on the lease?
Full cost of equipment present value 15,192 minus (1st payment) 4,000 = 11,192 Amount financed PV ordinary annuity 4 11,192 / 4,000 = 2.798
71
calc, note payable to be credited on the balance sheet
10,000 note payable x .944 = 9440 10,000 x3% x.944 x 9/12 = 212.4 trade terms are 9 months so the reason we have 9/12
72
Calc, the noncurrent investment for the bond sinking fund requirement?
Beginning balance 450,000 Investment 90,000 Dividends received 15,000 interest earned. 30,000 costs (5,000) = 580,000 noncurrent investment
73
Calc, the bond insurance that eagle receive?
Step 1 - calc the face amount with the disocunt 600,000 x 0.99 = 594,000 Step 2 - calc the accrued interest for 3 months 600,000 face amount x 10% coupon rate x 3/12 = 15,000 accrued interest Step 3 - add the bonds proceeds and accrued interest 594,000 + 15,000 accrued interest = 609,000 bond insurance
74
Calc, the bond issue costs are unamortized at June 30, Year 4?
Using the straight line method Here we will 250,000 / 10 years = 25,000 per year + 12,500 = 37,500 Bonds issue cost 250,000 - 37,500 = 212,500 bond issue costs
75
Calc, the unamortized discount the end of the first year?
Bond was issued 96,207 x 10% = 9,621 - 9000 = 621 Bond discounts 3,793 - 621 = 3,172
76
Change in the decommissioning liability be recognized ?
The change in the liability is recognized in profit or loss
77
How should a change in decommissioning liability be recognized?
The change in the liability is recognized in profit or loss
78
characterizes convertible debt?
no value is assigned to the conversion feature when the convertible debt is issued
79
Type of bonds particular bond issurance will not mature on the same date?
serial bonds will not mature on the same date
80
Calc, the amount casey report as gain in its income statement?
185,000 carrying amount 85,000 land 185,000 carrying amount 120,000 fair value = 65,000 120,000 fair value 85,000 land = 35,000 = 65,000 + 35,000 = 100,000
81
Calc, the note payable
initial payment 20,000 x 4.712 = 94,240 Present value of original annuity of $1 at 11%
82
Calc, the carrying amount for the bond?
Carrying amount - 363,600 amortized discount 3,600 Issued the bonds. 360,000 The amount determine 360,000 amount vole received - 3,600 = 360,000 received upon issued the bonds
83
Debenture are...
unsecured bonds and are bonds that secured by the full faith and credit of the issuing firm
84
Calc, the liability for the accrued interest?
Start off 10,000 with the borrowed funds multiply by 12% 10,000 x 12% = 1,200 Step 2 - calc the 10,000 borrowed 1,200 = 11,200 x 12% x 10 / 12 = 1,120 = 1,200 + 1,120 = 2320
85
When the effective interest method of amortization is used for bonds issued at a premium, the amount of interest payable for an interest period is calc by multiplying the
face value of the bonds at the beginning of the period by the contractual interest rate
86
how is the interest expense calc?
carrying amount of the bonds at the beginning of the period by the effective interest rates
87
The discount resulting from the determination of a notes present value should be reported on the balance sheet
direct deduction from the face amount of the note
88
Calc the net carrying amount payable at the end of the year for the bond discounts?
carrying amount 96,207 x 10% yield = 9,621 100,000 x 9% = 9,000 9,621 - 9000 = 621 carrying amount 96,207 +621 = 96,828
89
89

Financial Accounting Reporting (28 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions