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ADMS 3595 (10)
Lecture

ch14.doc

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Department
Administrative Studies
Course Code
ADMS 3595
Professor
Rebecca Jubis

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Description
CHAPTER 14 LONG-TERM LIABILITIES IFRS questions are available at the end of this chapter. TRUE-FALSE Conceptual Answer No. Description T 1. Bond interest payments. F 2. Debenture bonds. T 3. Definition of serial bonds. F 4. Market rate vs. coupon rate. F 5. Definition of stated interest rate. T 6. Stated rate and coupon rate. F 7. Amortization of premium and discount. F 8. Issuance of bonds. F 9. Interest paid vs. interest expense. T 10. Accounting for bond issue costs. T 11. Refunding of bond issue. F 12. Long-term notes payable. T 13. Implicit interest rate. T 14. Imputation and imputed interest rate. T 15. Off-balance-sheet financing. T 16. Debt to total assets ratio. F 17. Refinancing long-term debt. F 18. Times interest earned ratio. F *19. Loss recognized on impaired loan. F *20. Gain/loss in troubled debt restructuring. MULTIPLE CHOICE Conceptual Answer No. Description a 21. Liability identification. a 22. Bond terms. b 23. Definition of "debenture bonds." a P24. Definition of bearer bonds. d S25. Definition of income bonds. a S26. Effective-interest vs. straight-line method. S d 27. Interest rate of the bond indenture. d 28. Rate of interest earned by the bondholders. d 29. Calculating the issue price of bonds. d 30. Calculating the issue price of bonds. b 31. Premium and interest rates. a 32. Interest and discount amortization. d 33. Effective-interest amortization method. d 34. Impact of effective-interest method. c 35. Recording bonds issued between interest dates. d 36. Bonds issued at other than an interest date. d 37. Classification of bond issuance costs. 14 - 2 Test Bank for Intermediate Accounting, Thirteenth Edition c 38. Bond issuance costs. MULTIPLE CHOICE Conceptual (cont.) Answer No. Description b 39. Classification of treasury bonds. d 40. Early extinguishment of bonds payable. d P41. Gain or loss on extinguishment of debt. c 42. In-substance defeasance. c P43. Reporting long-term debt. a S44. Debt instrument exchanged for property. d 45. Valuation of note issued in noncash transaction. d 46. Stated interest rate of note. c 47. Accounting for discount on notes payable. d 48. Off-balance-sheet financing. c S49. Off-balance-sheet financing. d S50. Long-term debt maturing within one year. d 51. Required bond disclosures. d 52. Long-term debt disclosures. c 53. Times interest earned ratio. c. 54. Debt to total assets ratio. c *55. Modification of terms in debt restructure. d *56. Gain/loss on troubled debt restructuring. b *57. Gain/loss on troubled debt restructuring. b *58. Interest and troubled debt restructuring. c *59. Creditor's calculations for modification of terms. P SThese questions also appear in the Problem-Solving Survival Guide. These questions also appear in the Study Guide. * This topic is dealt with in an Appendix to the chapter. MULTIPLE CHOICE Computational Answer No. Description a 60. Calculate the present value of bond principal. b 61. Calculate the present value of bond interest. a 62. Determine the issue price of bonds. c 63. Proceeds from bond issuance. c 64. Bonds issued between interest dates. c 65. Proceeds from bond issuance. c 66. Bonds issued between interest dates. c 67. Effective-interest method interest expense. a 68. Effective-interest method carrying value. d 69. Straight-line method carrying value. d 70. Straight-line amortization/interest expense. c 71. Effective-interest method interest expense. a 72. Effective-interest method carrying value. d 73. Straight-line method carrying value. d 74. Straight-line method amortization/interest expense. b 75. Interest expense using effective-interest method. c 76. Interest expense using effective-interest method. d 77. Entry to record issuance of bonds. Long-Term Liabilities 14 - 3 a 78. Calculate bond interest expense. MULTIPLE CHOICE Computational (cont.) Answer No. Description b 79. Entry to record issuance of bonds. c 80. Calculate bond interest expense. b 81. Calculate interest expense for two periods. b 82. Calculate unamortized bond discount balance. b 83. Calculate unamortized bond premium balance. c 84. Calculate interest expense for two periods. b 85. Entry to record bond redemption. b 86. Entry to record bond redemption. b 87. Calculate loss on bond redemption. c 88. Calculate loss on bond redemption. c 89. Calculate gain on retirement of bonds. b 90. Calculate gain on retirement of bonds. b 91. Calculate loss on retirement of bonds. b 92. Bond retirement with call premium. b 93. Calculate loss on retirement of bonds. b 94. Early extinguishment of debt. b 95. Early extinguishment of debt. a 96. Interest on noninterest-bearing note. c 97. Interest on installment note payable. b 98. Determine balance of discount on notes payable. d 99. Calculate times interest earned ratio. a 100. Calculate times interest earned ratio. c 101. Calculate income before taxes with times interest earned ratio. d 102. Determine total long-term liabilities. b *103. Transfer of equipment in debt settlement. d *104. Recognizing gain on debt restructure. a *105. Interest and troubled debt restructuring. MULTIPLE CHOICE CPA Adapted Answer No. Description a 106. Determine proceeds from bond issue. b 107. Determine unamortized bond premium. a 108. Determine unamortized bond discount. c 109. Calculate bond interest expense. a 110. Calculate loss on retirement of bonds. d 111. Calculate loss on retirement of bonds. d 112. Calculate gain on retirement of bonds. c 113. Determine carrying value of bonds to be retired. c 114. Carrying value of bonds with call provision. c 115. Classification of gain from debt refunding. d *116. Classification of gain from troubled debt restructuring. 14 - 4 Test Bank for Intermediate Accounting, Thirteenth Edition EXERCISES Item Description E14-117 Terms related to long-term debt. E14-118 Bond issue price and premium amortization. E14-119 Amortization of discount or premium. E14-120 Entries for bonds payable. E14-121 Retirement of bonds. E14-122 Early extinguishment of debt. *E14-123 Accounting for a troubled debt settlement. *E14-124 Accounting for troubled debt restructuring. *E14-125 Accounting for troubled debt. PROBLEMS Item Description P14-126 Bond discount amortization. P14-127 Bond interest and discount amortization. P14-128 Entries for bonds payable. P14-129 Entries for bonds payable. *P14-130 Accounting for a troubled debt settlement. CHAPTER LEARNING OBJECTIVES 1. Describe the formal procedures associated with issuing long-term debt. 2. Identify various types of bond issues. 3. Describe the accounting valuation for bonds at date of issuance. 4. Apply the methods of bond discount and premium amortization. 5. Describe the accounting for the extinguishment of debt. 6. Explain the accounting for long-term notes payable. 7. Explain the reporting of off-balance-sheet financing arrangements. 8. Indicate how to present and analyze long-term debt. *9. Describe the accounting for a loan impairment. *10. Describe the accounting for debt restructuring.
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