ch F 09 - Chapter 9 The Balance Sheet and Income Statement...

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Unformatted text preview: Chapter 9 The Balance Sheet and Income Statement – A Closer Look SOLUTIONS TO APPLY WHAT YOU HAVE LEARNED 9-14. 1. f Obligations not requiring payment within the next year 2. c Items controlled by a company that are not expected to become cash within the next year 3. a Describes an item's nearness to cash 4. g The owners' residual interest in a corporation 5. i Long-lived tangible assets less all the depreciation expense ever recognized on those assets 6. d Obligations that must be retired within the next year 7. h Equal to total assets 8. b Items controlled by a company that are expected to become cash within the next year 9. e An investment in a contractual arrangement such as a patent 10. j A long-term commitment to ownership of other entities 9-15. a. Investments on the balance sheet represent long-term commitments to ownership of other entities, called subsidiaries; or investments in trust funds, bond sinking funds, or bonds of other corporations. Investments are assets not intended to be used within the next year and are classified as long-term assets. b. Answers will vary; three examples are a bond sinking fund, investments in the common stock of a subsidiary company, or bonds that have been issued by another company. All of these investments would be classified as long-term assets. Chapter 9 – The Balance Sheet and Income Statement – A Closer Look F-209 9-16. a. Intangible assets are those that do not have a physical form but provide special revenue-producing benefits to a company through contracts. They are considered to be capital assets and their cost is amortized (except for goodwill) over their economic lives. b. Answers will vary, three examples include copyrights, patents, trademarks, trade names, and purchased goodwill. All of these items are classified as long-term assets under the heading of Intangibles or Intangible Assets. c. Amortization is the term applied to the process of matching cost of an asset with the time periods benefited or with the revenue it helps to create. This is similar to depreciation. 9-17. 1. c Accounts payable 2. f Common stock 3. d Franchise 4. a Accounts receivable 5. c Note payable due within one year 6. a Prepaid expenses 7. f Preferred stock 8. e Note payable due in two years 9. g Amounts earned by the company but not yet distributed to the owners of the business 10. f Amounts received in excess of par value on the sale of stock 11. h Bonds held by the company to earn interest revenue 12. b Land 13. b Stock of a subsidiary 14. c Wages payable 15. b Vehicles 16. d Copyright 17. a Cash 18. b Buildings 19. e Bonds payable 20. d Trade mark 9-18. a. amount in common stock = number of shares in common stock par value per share $55,000 / $1 per share = 55,000 shares Chapter 9 – The Balance Sheet and Income Statement – A Closer Look F-210 9-18. (Continued) b. common stock amount + additional paid-in capital amount = cash received from sale common stock sale: $55,000 + $866,400 = $921,400 c....
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ch F 09 - Chapter 9 The Balance Sheet and Income Statement...

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