ACCT 551 - Intermediate Accounting II (DeVry)
1. Question : (TCO D) A bond discount should
be shown on the balance sheet as:
2. Question : (TCO D) "In-substance
defeasance" is a term used to refer to an arrangement whereby
3. Question : (TCO D) On January 1, 2010,
Ellison Co. issued eight-year bonds with a face value of $1,000,000
and a stated interest rate of 6%, payable semiannually on June 30
and December 31. The bonds were sold to yield 8%. Table values are:
4. Question : (TCO D) On January 1, 2010,
Crown Company sold property to Leary Company. There was no
established exchange price for the property, and Leary gave Crown a
$2,000,000 zero-interest-bearing note payable in five equal annual
installments of $400,000, with the first payment due December 31,
2010. The prevailing rate of interest for a note of this type is
9%. The present value of the note at 9% was $1,442,000 at January
1, 2010. What should be the balance of the Discount on Notes
Payable account on the books of Leary at December 31, 2010 after
adjusting entries are made, assuming that the effective-interest
method is used?
5. Question : (TCO D) On January 1, 2006,
Goll Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000.
These bonds were to mature on January 1, 2016, but were callable at
101 any time after December 31, 2009. Interest was payable
semiannually on July 1 and January 1. On July 1, 2011, Goll called
all of the bonds and retired them. Bond premium was amortized on a
straight-line basis. Before income taxes, Goll's gain or loss in
2011 on this early extinguishment of debt was
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