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WorksheetsNon Current Liabilities
Total questions: 13
Worksheet time: 20mins
The term used for bonds that are unsecured as to principal is
junk bonds.
debenture bonds.
indebenture bonds.
callable bonds.
Bonds that pay no interest unless the issuing company is profitable are called
collateral trust bonds.
debenture bonds.
revenue bonds.
income bonds.
The rate of interest actually earned by bondholders is called the
stated rate only.
yield rate only.
effective rate only.
effective, yield or market rate.
Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to
the market rate multiplied by the beginning-of-period carrying amount of the bonds.
the market rate of interest multiplied by the face value of the bonds.
the stated (nominal) rate of interest multiplied by the face value of the bonds.
the stated rate multiplied by the beginning-of-period carrying amount of the bonds.
The amortization of a premium on bonds payable
decreases the balance of the bonds payable account.
increases the amount of interest expense reported.
increases the carrying amount of the bond.
increases the cash payment to bondholders.
When a note payable is issued for property, goods, or services, the present value of the note may be measured by
the fair value of the property, goods, or services.
the fair value of the note.
using an imputed interest rate to discount all future payments on the note.
All of these answer choices are correct.
In a debt extinguishment in which the debt is settled by a transfer of assets with a fair value less than the carrying amount of the debt, the debtor would recognize
no gain or loss on the settlement.
a gain on the settlement.
a loss on the settlement.
None of these answer choices are correct.
Note disclosures for long-term debt generally include all of the following except
names of specific creditors.
call provisions and conversion privileges.
restrictions imposed by the creditor.
assets pledged as security.
If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
debit to Interest Payable.
credit to Interest Receivable.
credit to Interest Expense.
credit to Unearned Interest.
Everhart Company issues €10,000,000, 6%, 5-year bonds dated January 1, 2019 on January 1, 2019. The bonds pays interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?
€10,000,000
€10,432,988
€10,437,618
€10,434,616
If the market rate is greater than the stated rate, bonds will be sold at a premium.
TRUE
FALSE
The replacement of an existing bond issue with a new one is called refunding
true
false
The cash paid for interest will always be greater than interest expense when using effective-interest amortization for a bond.
FALSE
TRUE
