Question 1

A bond premium has the effect of

Accepted Answer

A)  lowering the carrying value of the bond.
B)  raising the effective interest rate above the face interest rate.
C)  increasing the amount of cash paid for interest each six months.
D)  lowering the effective interest rate below the face interest rate.E) A) and B)
F) A) and D)

Question 2

When the terms of a lease require that the lessee record an asset and a liability,the two accounts are recorded at the present value of the total lease payments required.

Accepted Answer

A) True 
 B)False

Question 3

The present value of a bond is always less than the face value of the bond.

Accepted Answer

A) True 
 B)False

Question 4

The responsibility for receiving the proper amount of interest falls on the bondholder most heavily in the case of

Accepted Answer

A)  term bonds.
B)  serial bonds.
C)  coupon bonds.
D)  registered bonds.E) C) and D)
F) A) and C)

Question 5

When the straight-line method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by

Accepted Answer

A)  adding the amount of premium amortization for the period to the amount of cash paid for interest during the period.
B)  deducting the amount of premium amortization for the period from the amount of cash paid for interest during the period.
C)  multiplying the carrying value of the bonds by the effective interest rate.
D)  multiplying the face value of the bonds by the face interest rate.E) C) and D)
F) All of the above

Question 6

Any unamortized bond discount should be reported on the balance sheet of the issuing corporation as a(n)

Accepted Answer

A)  asset.
B)  direct deduction from retained earnings in the stockholders' equity section.
C)  addition to the face amount of the bonds in the liability section.
D)  direct deduction from the face amount of the bonds in the liability section.E) All of the above
F) B) and D)

Exam 14: Long Term Liabilities

The responsibility for receiving the proper amount of interest falls on the bondholder most heavily in the case of

Correct Answer
verified

When the terms of a lease require that the lessee record an asset and a liability,the two accounts are recorded at the present value of the total lease payments required.

Correct Answer
verified

The present value of a bond is always less than the face value of the bond.

Correct Answer
verified

When the straight-line method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by

Correct Answer
verified

Any unamortized bond discount should be reported on the balance sheet of the issuing corporation as a(n)

Correct Answer
verified

A bond premium has the effect of

Correct Answer
verified

Exam 14: Long Term Liabilities

The responsibility for receiving the proper amount of interest falls on the bondholder most heavily in the case of

Correct AnswerverifiedShow Answer

When the terms of a lease require that the lessee record an asset and a liability,the two accounts are recorded at the present value of the total lease payments required.

Correct AnswerverifiedShow Answer

The present value of a bond is always less than the face value of the bond.

Correct AnswerverifiedShow Answer

When the straight-line method of amortization is used for a bond premium,the amount of interest expense for an interest period is calculated by

Correct AnswerverifiedShow Answer

Any unamortized bond discount should be reported on the balance sheet of the issuing corporation as a(n)

Correct AnswerverifiedShow Answer

A bond premium has the effect of

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified