tbch10 - C HAPTER 10 Debt Financing M ULTIPLE C HOICE Q...

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Unformatted text preview: C HAPTER 10 Debt Financing M ULTIPLE C HOICE Q UESTIONS Theory/Definitional Questions 1 Definition of a liability 2 Valuation of a liability 3 Characteristics of a liability 4 Short-term notes payable with no stated interest should be discounted to PV 5 Proper classification of notes 6 Examples of liabilities under FASB definition 7 Effect of refinancing on current liabilities 8 Theoretical value of proceeds from bond sale 9 How premium amortization affects interest expense and bond value 10 Presentation of unamortized bond premium on balance sheet of issuer 11 Effective-interest rate method of amortization and effect on expense 12 How discount amortization affects interest expense and bond value 13 Presentation of bond discount 14 Treatment of gains/losses on early extinguishment of debt 15 Treatment of gains/losses on early extinguishment of debt 16 Treatment of gains/losses on bond redemption by issuer 17 FASB definition of troubled debt restructuring 18 How to calculate market price of bond issued at discount 19 Number of months interest expense for bond issued in June, payments in May and November 20 Market rate of interest for premium bond 21 Effect of discount and premium amortization on bond carrying value 22 Premium and discount amortization increases each year for issuer under effective-interest method 23 Book and market value methods of showing outstanding bonds 24 Definition of debenture bonds 25 Definition of callable bonds 26 Bond issue price and amortization methods 27 Effective-interest rate and stated rate 28 Bonds sold at a discount 29 Bonds sold at a premium 30 Effective-interest rate and stated rate 31 Components of bond price 101 102 Chapter 10 Debt Financing 32 Amortization of bond premium 33 Net amount of bond liability 34 Effective-interest amortization method 35 Balance sheet classification of premiums and discounts 36 Effective-interest amortization method 37 Bond retirement at maturity 38 Journal entry for bond payments 39 Accrued interest on bonds sold between payment dates 40 Accrued interest on bonds sold between payment dates 41 Accrued interest on bonds sold between payment dates Computational Questions 42 Amount to be shown on current liabilities section of balance sheet 43 Computation of liability for premium claims outstanding 44 Computation of amount of noncurrent liabilities 45 Computation of amount of current notes payable 46 Computation of short- and long-term payable amounts * 47 Computation of amount of premium/discount 48 Apply book value method to bond conversion 49 Computation of times-interest-earned ratio 50 Determine amount of debenture bonds 51 Determine total of serial bonds * 52 Computation of total issue price of bonds 53 Computation of amount of deferred charge to be amortized 54 Computation of carrying amount of bonds payable 55 Computation of cash to be received at time of issuance 56 Computation of bond interest expense under effective-interest method 57 Computation of discount amortization under effective-interest method...
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tbch10 - C HAPTER 10 Debt Financing M ULTIPLE C HOICE Q...

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