All of the following are benefits of leasing except:
A
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All of the following are benefits of leasing except:
A. They provide flexibility to change capacity as needed without having to purchase or sell assets.
B. They have the ability to shift the tax benefits from depreciation and other deductions from a lessee that has little or no taxable income to a lessor that has substantial taxable income.
C. They have the ability to reduce the risk of technological obsolescence, relative to outright ownership, by maintaining the flexibility to shift to technologically more advanced assets.
D. In an operating lease, the lessee recognizes the signing of the lease as the simultaneous acquisition of a long-term asset and the incurring of a long-term liability for lease payments.
All of the following are typically recognized as accounting liabilities except:
A. Bonds Payable
B. Loan Guarantees
C. Taxes Payable
D. Rental Fees Received in Advance
Which is the date when employees elect to exchange the option and cash for shares of common stock?
A. Exercise Date
B. Vesting Date
C. Market Date
D. Grant Date
Which of the following are FALSE?
A. If management intends to refinance short term debt to a long term basis and can demonstrate the ability to complete such a refinancing to long term, then GAAP allows the obligation to remain as a long term debt.
B. In the U.S., convertible bonds are treated as a liability while convertible preferred stock is treated as equity.
C. If a company issues a bond at less than par ($1,000), then it must use the effective interest rate method and recognize additional interest expense in excess of the coupon rate.
D. Under GAAP, cash payments for interest may be shown as either operating or financing cash flows on the cash flow statement.
Under the fair value method of accounting for stock options, firms must value stock options on what date?
A company issues bonds on Jan. 1 with a face value of $100,000,000 and receives $99,500,000 net of floatation costs. The bonds have a 6% coupon and pay interest annually Dec. 31. The term of the bond is 5 years. What is the effective interest rate on these bonds, and what is the liability the company would show on its books at Dec. 31 after the first interest payment?
Which of the following is not one of the three criteria for recognition of a liability?
A. The firm has little or no discretion to avoid the transfer.
B. The transaction or event giving rise to the liability has already occurred.
C. The obligation involves a probable future sacrifice of resources at a specified or determinable date.
D. The firm is required to make a cash payment for the goods or services.
Under IFRS, cash payments for interest can be reported as what?
A. investing cash outflow
B. financing cash outflow
C. operating cash outflow
D. Both operating and financing cash flow are correct.
All of the following are primary events that typically lead to changes in book value of shareholders' equity except:
A. Distributions to shareholders, usually in the form of periodic cash dividend payments to investors and sometimes in the form of share repurchases.
B. Investments by shareholders, usually net cash received by the company at equity issue date.
C. Debt holders requiring firms to enter into debt covenants.
D. Profitable operating and investing activities, with net income being a large component of this increase.
All of the following are typically recognized as accounting liabilities except:
A. Purchase Commitments
B. Notes Payable
C. Warranties Payable
D. Subscription Fees Received in Advance
