CLASS QUESTIONS 5BMWF - liability. (2) What is the...

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CLASS QUESTIONS (5B) (1) If bonds payable are due to be paid in three months out of funds being held in a bond sinking fund classified as a long-term investment, do you think the bonds would be classified as a current liability or a non-current liability? Explain your answer in the context of the definition of a current liability . A current liability can be defined as an obligation whose liquidation is reasonably expected to require use of existing resources properly classified as current assets, or the creation of other current liabilities. I don’t think this situation includes a current liability because the bonds payable are being funded by a long-term investment. This goes against the definition of a current
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Unformatted text preview: liability. (2) What is the difference in Unappropriated Retained Earnings and Restricted Retained Earnings ? (3) Describe the 3 levels of the fair value hierarchy used for valuing financial instruments (p. 193). Level 1: Measures (the most reliable) are based on observable inputs, such as market prices for identical assets or liabilities. Level 2: measures (less reliable) are based on market-based inputs other than those included in Level 1, such as those based on market prices for similar assets or liabilities. Level 3: measures (least reliable) are based on unobservable inputs; such as a company’s own data or assumptions....
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This note was uploaded on 09/02/2011 for the course MGT 3305 taught by Professor Reed during the Spring '08 term at Baylor.

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