Ch 14 - Name Status Score Instructions Test Long-Term...

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Name: Test Long-Term Liabilities --- Stec Status : Completed Score: 230 out of 250 points Instructions: Question 1 Multiple Choice 10 of 10 points Axlon Company issues $10,000,000 face value of bonds at 96 on January 1, 2006. The bonds are dated January 1, 2006, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2009, $6,000,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2009? Selected Answer: $272,000 loss Question 2 Multiple Choice 10 of 10 points On January 1, 2007, Bleeker Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: Present value of 1 for 8 periods at 6% .627 Present value of 1 for 8 periods at 8% .540 Present value of 1 for 16 periods at 3% .623 Present value of 1 for 16 periods at 4% .534 Present value of annuity for 8 periods at 6% 6.210 Present value of annuity for 8 periods at 8% 5.747 Present value of annuity for 16 periods at 3% 12.561 Present value of annuity for 16 periods at 4% 11.652 The present value of the principal is Selected Answer: $534,000. Question 3 Multiple Choice 10 of 10 points The interest rate written in the terms of the bond indenture is called the effective yield or market rate. Selected Answer: False Question 4 Multiple Choice 10 of 10 points Bonds that pay no interest unless the issuing company is profitable are called Selected Answer: income bonds. Question 5 Multiple Choice 10 of 10 points An example of an item which is not a liability is Selected Answer: dividends payable in stock. Question 6 Multiple Choice 10 of 10 points The loss to be recognized by a creditor on an impaired loan is the difference between the investment in the loan and the expected undiscounted future cash flows from the loan.
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Ch 14 - Name Status Score Instructions Test Long-Term...

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