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B fro m the investors perspective preferred stock is

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b.From the investor’s perspective, preferred stock is less risky than bonds.c.If a preferred issue is cumulative this means that the issuing company is permitted topay dividends on its common stock even if it failed to pay the dividend on its preferredstock.d.Most nonconvertible preferred stock is owned by corporations.885.A 10-year convertible bond has a face value of P1,000 and pays an annual coupon ofP50.The bond’s conversion price is P40.The issuing company’s stock currently tradesat P30 a share.The company can issue straight (non-convertible) debt with an 8percent yield.Which of the following statements is most correct?a.The bond’s conversion value is currently P750.b.The bond’s straight-debt value is P750.c.The bond’s straight-debt value is P1,000.d.The convertible bond should sell for less than P750.886.When an entity chooses the revaluation model as its accounting policy for measuringproperty, plant and equipment, which of the following statements is correct?a.Revaluation of property, plant and equipment must be made at least every threeyears.b.When an asset is revalued, the entire class of property, plant and equipment to whichthat asset belongs must be revalued.c.Increases in an asset’s carrying value as a result of the first revaluation must berecognized as a component of profit or loss.d.When an asset is revalued, individual assets within a class of property, plant andequipment to which that asset belongs can be revalued.
216 |T h e o r y o f A c c o u n t s887.The lease analysis should compare the cost of leasing to thea.Cost of owning using debt.b.Cost of owning using equity.c.After-tax cost of debt to measure the effect of leasing on the cost of equity.d.d. Cost of owning using the weighted average cost of capital for the firm.888.Which of the following statements is most correct?a.Financial leases are fully amortized.b.Financial leases can be canceled.c.Financial leases provide for maintenance servicesd.Operating leases can never be canceled.889.A construction company signed a contract to build a theater over a period of 2 years,and with this contract also signed a maintenance contract for 5 years. Both the contractsare negotiated as a single package and are closely interrelated to each other.The two contracts should bea.Segmented and considered 2 separate contractsb.Combined and treated as a single contract.c.Treated differently, the building contract under the completed contract method andmaintenance contract under the percentage of completion method.d.Recognized under the completed contracted method.890.Under NGAS, the standard residual value of depreciable assets is equal toa.zerob. 10% of costc. P1,000d. P5, 000891.XYZ Company has a probable loss that can only be reasonable estimated within a rangeof outcome.No single amount within a range is a better estimate than any otheramount.The loss accrual should bea.Zerob.The maximum of the rangec.The midpoint of the ranged.The minimum of the range

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Term
Fall
Professor
madam anum naseer
Tags
Balance Sheet, Income Statement, Generally Accepted Accounting Principles, PFRS

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