Quiz_5-Key - ACC 5110 Name: Part I. Choose the best answer....

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ACC 5110 Winter 2010 QUIZ 5 Name : KEY Part I. Choose the best answer. 1. If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be a. greater than if the straight-line method were used. b. greater than the amount of the interest payments. c the same as if the straight-line method were used. d. less than if the straight-line method were used. 2. The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as a. an adjustment to the cost basis of the asset obtained by the debt issue. b. an amount that should be considered a cash adjustment to the cost of any other debt issued over the remaining life of the old debt instrument. c. an amount received or paid to obtain a new debt instrument and, as such, should be amortized over the life of the new debt. d. a difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemption. 3. Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to a. the stated (nominal) rate of interest multiplied by the face value of the bonds. b.
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This note was uploaded on 01/18/2011 for the course ACC 5110 taught by Professor Lee during the Winter '10 term at Wayne State University.

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Quiz_5-Key - ACC 5110 Name: Part I. Choose the best answer....

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