10. When measuring recording interest expense for bonds payable, A. the yield ra
ID: 2457217 • Letter: 1
Question
10. When measuring recording interest expense for bonds payable,
A. the yield rate should be reflected over the life of the bond issue, thus the straight-line interest method should be used
B. the yield rate should be reflected over the life of the bond issue, thus the effective interest method should be used
C. the interest expense should be based on the face value of the bonds if the bonds are issued at a discount or premium
D. the amount of interest expense will differ each period of the bonds are issued at par
11. The theoretical basis for requiring companies to use fair value accounting to account for investments in equity securities derives primarily from a qualitative characteristic of reporting financial information from SFAC 8 (previously SFAC 2). The characteristic which best applies to this requirement is
A. faithful representation (reliability in SFAC 2)
B. timeliness
C. consistency
D. relevance
12. Accounting for convertible debt is both a theoretical and practical problem in accounting. Is it a debt instrument, an equity instrument, or both? Under accounting standard APB Opinion 14 the amount of the conversion feature of convertible debt should be shown as
A. a liability
B. equity
C. a special item between liabilities and equity
D. separate components shown as both equity and liabilities
13. The joint project on accounting for leases by the FASB and IASB came about because users of financial information believe that
A. leases are being classified as capital leases which they believe should be classified as operating leases
B. leases are being classified as operating leases which they believe should be classified as capital leases
C. leases are becoming a more predominant method of financing asset acquisitions used in business operations
D. off-balance sheet financing has become less of an issue since the initial lease standard (SFAS 13)
14. The primary reason that the FASB does not allow for the capitalization of most research and development costs is because
A. of the uncertainty of future benefits
B. of the difficulty of measuring the initial research and development costs
C. of the difficulty of determining the amortization period for research and development costs
D. of the difficulty segregating research costs from development costs
15. In 1936 the AICPA recognized the difference in importance between items reported in the balance sheet as current assets and liabilities, and long-term assets and liabilities, for the different users of financial information. They acknowledge that the liquidity of a business was as important, if not more important, than long-term assets and liabilities from the point of view of the
A. debtor
B. common stock shareholder
C. creditor
D. preferred stock shareholder
16. In Accounting Research Bulletin (ARB) 43 intangible assets were originally classified as “Type a” or “Type b” intangibles. Since that time changes have been made to the classification of intangible assets. SFAS 142 issued in 2001 changed the classification of intangibles to which of the following two groups?
A. identifiable and unidentifiable
B. externally acquired and internally developed
C. amortizable and unamortizable
D. indefinite life and finite (definitive) life
17. Capitalization of certain costs subsequent to the acquisition of an asset, which are related to the asset, is typically done
A. because of the materiality of the amount involved
B. because it increases the salvage value of the asset
C. because of the uncertainty of future economic benefit
D. because the costs has future service potential for the asset
I want explanation.??? don't hurry up take time
Explanation / Answer
10. When measuring recording interest expense for bonds payable,
B. the yield rate should be reflected over the life of the bond issue, thus the effective interest method should be used
Note:
The interest expense should be based on the Issue Price of the bonds if the bonds are issued at a discount or premium,
The amount of interest expense will remain same each period of the bonds are issued at par
The amount of interest expense will differ each period of the bonds are issued at discount or premium,
The interest Payment should be based on the face value of the bonds if the bonds are issued at a discount or premium or par
Premium or discount is being amortised over the life of bond and It can be amortised either Straight line method or effective interest method,
In Straight Line method equal amount of premium or discount is amortised over the life which does not result yield rate
In Effective interest method , difference in interest expenses & interest payment is amortised over the life which shows correct yield i.e interest expenses on issue price and amortised over the life
Note : Please dont ask multiple question in single question, please ask seperately
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.