Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Mapa Institute of Technology FIL 11 Problem 4-10 Multiple choice (IAA) 1)What condition is necessary to recognize an environmental liability?   The entity has an existing legal obligation and the amount of the liability can be reliably estimated

Mapa Institute of Technology FIL 11 Problem 4-10 Multiple choice (IAA) 1)What condition is necessary to recognize an environmental liability?   The entity has an existing legal obligation and the amount of the liability can be reliably estimated

Accounting

Mapa Institute of Technology

FIL 11

Problem 4-10 Multiple choice (IAA)

1)What condition is necessary to recognize an environmental liability?

 

    1. The entity has an existing legal obligation and the amount of the liability can be reliably estimated.
    2. The entity can reliably estimate the amount of the liability.
    3. The entity has a existing legal obligation.
    4. Obligating event has occurred.

 

 

  1. Which of the following is not considered when evaluating whether or not to received a liability for pending litigation?

 

    1. Time period in which the underlying cause of action occurred.
    2. The type of litigation involved.
    3. The probability of an unfavorable outcome.
    4. The ability to make a reliable estimate of the amount of the loss.

 

 

 

  1. Which of the following is required to disclose regarding risk and uncertainties that exist?

 

    1. Factor causing an estimate to be sensitive.
    2. The potential impact of estimate when it is reasonably possible that the estimate will change in the future.
    3. The potential impact of estimate when it is remotely possible that the estimate will change in the future.

 

    1. A description of operations both within and outside of the home country.

 

 

  1. A contingent liability is

 

    1. An estimated liability.
    2. An event which is not recognized because it is not probable that an outflow will be required or the amount cannot be reliably estimated.
    3. A potential large liability.
    4. A potential small liability.

 

 

  1. How should incurred cost associated with relocating employees in a restructuring be accounted for?

 

    1. Measured at fair value and recognized over two years.
    2. Measured at fair value and recognized when the liability is incurred.
    3. Recognized when cost are paid.
    4. Measured at fair value and treated as prior period error.

 

 

 

 

 

 

 

 

 

Problems 5-1 Multiple Choice (PFRS 9)

 

  1. Bonds Payable not designated at fair value through profit loss shall be measured initially at

 

    1. Fair value
    2. Fair value plus bond issue cost
    3. Fair value minus bond issue cost

 

    1. Face amount

 

 

  1. After initial recognition, bonds payable shall be measured at

 

  1. Amortized cost using the effective interest method.

 

  1. Fair value through profit or loss.

 

    1. I only
    2. II only
    3. Either I or II
    4. Neither I nor II

 

 

  1. The “amortized cost” of bonds payable means

 

    1. Face amount plus premium on bonds payable
    2. Face amount minus discount on bonds payable
    3. Face amount minus bond issue cost
    4. Face amount plus premium on bonds payable, minus discount on bonds payable and minus bond issue cost

 

 

  1. Under the fair value option, bonds payable shall be measured initially at

 

    1. Fair value
    2. Fair value plus bond issue cost
    3. Fair value minus bond issue cost
    4. Face amount

 

 

 

 

 

  1. Which of the following statement is true in relation to the fair value option of measuring a bonds payable?

 

  1. At initial recognition an entity may revocably designate a bond payable at fair value through profit or loss.

 

  1. The bond payable is remeasured at every year-end at fair value and any changes in fair value and any changes in fair value are recognized in other comprehensive income.

 

    1. I only
    2. II only
    3. Both I and II
    4. Neither I nor II

 

 

 

 

Problem 5-2 Multiple choice (AICPA Adapted)

 

  1. Bonds that mature on a single date are called

 

    1. Term bonds
    2. Serial Bonds
    3. Callable Bonds
    4. Convertible bonds

 

  1. Bond issued with scheduled maturities at various dates are called

 

    1. Convertible bonds
    2. Term bonds
    3. Serial bonds
    4. Callable bonds

 

 

  1. Costs incurred in connection with the issuance of ten-year bonds which sold at a slight premium shall be

 

    1. Charged to retained earnings when the bonds are issued
    2. Expensed in the year in which incurred
    3. Capitalized as organization cost
    4. reported in the statement of financial position as a deduction from bonds payable and amortized over the ten-year bond term

 

  1. When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be

 

    1. Decreased by accrued interest from June 1 to November 1

 

    1. Decreased by accrued interest from May 1 to June 1
    2. Increased by accrued interest from May 1 to June 1
    3. Increased by accrued interest from May 1 to June 1

 

  1. The issuer of a 10-year bond sold at par three years ago with interest payable February 1 and August 1 should report in the year-end statement financial position

 

    1. Liability for accrued interest
    2. An addition to bonds payable
    3. Increase in deferred charge
    4. Contingent Liability

 

  1. A bond issued on June 1 of the current year has interest payment dates of April 1 and

October 1.Bond interest expense for the current year ended December 31 is for a

period of

 

    1. Three months
    2. Four months
    3. Six months
    4. Seven months

 

  1. A ten year term bond was issued at a discount with a call provision to retire the bond.

When the bond issuer exercised the call provision on an interest date, the carrying

amount of the bond was less than the call price. The amount of bond liability derecognized should have equaled the

 

    1. Call price
    2. Call price less unamortized discount
    3. Face amount less unamortized discount
    4. Face amount plus unamortized discount

 

  1. How would the amortization of premium on bonds payable affect the carrying amount of bonds and net income, respectively?

 

    1. Increase and Decrease
    2. Increase and Increase
    3. Decrease and Decrease
    4. Decrease and Increase

 

  1. How would the amortization of discount on bonds payable affect the carrying amount of bond and net income, respectively?

 

    1. Increase and Decrease
    2. Increase and Increase
    3. Decrease and Decrease
    4. Decrease and Increase

 

  1. Unamortized debt discount should be reported as

 

    1. Direct deduction from the face value of the debt
    2. Direct deduction from the present value of the debt
    3. Deferred charge
    4. Part of the bond issue cost

 

 

 

 

 

 

Problem 5-3 Multiple Choice (IAA)

 

  1. Debentures are

 

    1. Unsecured bonds
    2. Secured bonds
    3. Ordinary bonds
    4. Serial bonds

 

 

  1. If bonds are issued between interest dates, the entry of the issuer could include a

 

    1. Debit to interest payable
    2. Credit to interest receivable
    3. Credit to interest expense
    4. Credit to unearned interest

 

 

  1. Which of the following statements is true regarding accrued interest on bonds that are sold between interest dates?

 

    1. The accrued interest is computed at the effective rate

 

    1. The accrued interest will be paid to the seller when the bonds mature
    2. The accrued interest is extra income to the buyer
    3. All of the statements are not true

 

 

  1. Which of the following statements is true regarding premium on bonds payable?

 

    1. The premium on bonds payable is a contra shareholders’ equity account
    2. The premium on bonds payable appears on the books of the investors
    3. The premium on bonds payable increases when amortization entries are made until maturity date
    4. The premium on bonds payable decreases when amortization entries are made until the balance reaches zero at the maturity date

 

 

 

 

  1. The carrying amount of a bond liability is the

 

    1. Call price of the bond plus bond discount or minus bond premium
    2. Face amount of the bond plus related premium or minus related discount
    3. Face amount of the bond plus related discount or minus related premium
    4. Maturity value of the bond plus related discount or minus related premium

 

 

  1. The proceeds from the sale of bonds

 

    1. Will always be equal to the face amount
    2. Will always be less than the face amount
    3. Will always be more than the face amount
    4. May be equal to or more or less than the face amount depending on market interest

rate

 

 

  1. An extinguishment of bonds payable originally issued at a premium is made by purchase of the bonds between interest dates. Which of the following statements is true at the time of extinguishment?

 

    1. Any costs of issuing the bonds must be amortized up to the purchase date
    2. The premium must be amortized up to the purchase date
    3. Interest must be accrued from the last interest date to the purchase date
    4. All of these statements are true

 

  1. When bonds are retired prior to maturity with proceeds from a new bond issue, any gain or loss from the early extinguishment of debt should be

 

    1. Amortized over the remaining original life of the retired bond issue
    2. Amortized over the life of the new bond issue
    3. Recognized in retained earnings
    4. Recognized in income from continuing operations

 

 

  1. An entity neglected to amortize to discount on outstanding bonds payable. What is the effect of the failure to record discount amortization on interest expense and bond carrying amount, respectively?

 

    1. Understated and understated
    2. Understated and overstated
    3. Overstated and overstated
    4. Overstated and understated

 

 

  1. An entity neglected to amortize the premium on outstanding bonds payable. What is the effect of the failure to record premium amortization on interest expense and bond carrying amount, respectively?

 

    1. Understated and understated
    2. Understated and overstated
    3. Overstated and overstated
    4. Overstated and understated

 

 

 

 

Problem 5-4 Multiple Choice (IAA)

 

  1. What is the contract between the issuer of bonds and the bondholders?

 

    1. Bond indenture
    2. Bond debenture

 

    1. Register bond
    2. Bond coupon

 

 

  1. Bonds for which the bondholder’s names are not registered with the issuer are called

 

    1. Bearer bonds
    2. Term bonds
    3. Debenture bonds
    4. Serial bonds

 

 

  1. Bonds that pay no interest unless the issuer is profitable are known as

 

    1. Registered bonds
    2. Junk bonds
    3. Mortgage bonds
    4. Income bonds

 

 

  1. Bond issue costs should be

 

    1. Expensed in the period when incurred.
    2. Recorded as a reduction in the carrying amount of bonds payable.
    3. Deferred and amortized over the life of the bonds
    4. Expensed in the period when the bonds are retired

 

 

  1. The amortization of discount on bonds payable

 

    1. Decreases the face amount of bonds payable
    2. Decreases the amount of interest expense
    3. Decreases the carrying amount of bonds payable
    4. Increases the carrying amount of bonds payable

 

 

Problem 6-1 Multiple choice (IAA)

 

  1. Under the effective interest method of amortization, the interest expense is equal to

 

    1. The stated rate of interest multiplied by the face amount of the bonds.
    2. The market rate of interest multiplied by the face amount of the bonds.
    3. The stated rate of interest multiplied by the beginning carrying amount of the bonds.
    4. The market rate of interest multiplied by the beginning carrying amount of the bonds.

 

  1. When interest expense for the current year is more than interest paid, the bonds were issued at

 

    1. A discount
    2. A premium
    3. Face amount
    4. Cannot be determined

 

 

  1. When interest expense for the current year is more than interest paid, the bonds were issued at

 

    1. A discount
    2. A premium
    3. Face amount
    4. Cannot be determined

 

 

  1. When an entity failed to recognized amortization of discount on bond payable for the current year, what is the effect of the error on liabilities and equity, respectively?

 

    1. Overstated and overstated
    2. Understated and understated
    3. Overstated and understated
    4. Understated and overstated

 

 

  1. Cost of issuing bonds payable

 

  1. Is included in the measurement of the bonds payable measured at amortized cost
  2. Is amortized using the “interest” method over the life of the bonds.
  3. Will effectively increase the market rate of interest

 

  1. I, II and III
  2. II and III only
  3. I and III only
  4. I and II only

 

 

 

 

 

 

 

 

Problem 6-2 Multiple choice

 

  1. What is the effective interest rate of a bond measured at amortized cost?

 

    1. The stated rate of the bond.
    2. The interest rate currently charged by the entity or by others for similar bond.
    3. The interest rate that exactly discounts estimated future cash payments through the expected life of the bond or when appropriate, a shorter period to the net carrying amount of the bond.
    4. The basic risk-free interest rate that is derived from observable government bond prices.

 

 

  1. For a bond issue which sells for less than face value, the market rate of interest is

 

    1. Dependent on rate stated on the bond
    2. Equal to rate stated on the bond
    3. Less than rate stated on the bond
    4. Higher than rate stated on the bond

 

 

  1. What is the market rate of interest for a bond issue which sells for more than face value?

 

    1. Less than rate stated on the bond

 

    1. Equal to rate stated on the bond
    2. Higher than rate stated on the bond
    3. Independent of rate stated on the bond

 

 

  1. If bond are issued at a premium, this indicate that

 

    1. The yield rate exceeds the nominal rate
    2. The nominal rate exceeds the yield rate
    3. The yield and nominal rates coincide
    4. No necessary relationship exists between the two rates

 

  1. Which of the following is true for a bond maturing on a single date when the effective interest method of amortizing bond discount is used?

 

    1. Interest expense as a percentage of the carrying amount varies from period to period
    2. Interest expense increases each six-month period
    3. Interest expense remains constant each six-month period
    4. Nominal interest rate exceeds effective interest rate

 

 

  1. In theory, the proceeds from the sale of a bond will be equal to

 

    1. The face amount of the bond
    2. The present value of the principal due at the end of the life of the bond plus the interest payments made during the life of the bond
    3. The face amount of the bond plus the present value of the interest payments during the life of the bond
    4. The sum of the face amount of the bond and the periodic interest payments

 

 

  1. The market price of a bond issued at a discount is the present value of the principal amount at the market rate of interest

 

    1. Less the present value of all future interest payments at the market rate of interest
    2. Less the present value of all future interest payments at the rate of interest stated on the bond
    3. Plus the present value of all future interest payments at the market of interest
    4. Plus the present value of all the future interest payments at the rate of interest stated on the bond

 

 

  1. A five-year term bond was issued by an entity on January 1, 2014 at a premium.

 

The carrying amount of the bond on December 31, 2015 would be

 

    1. The same as the carrying amount on January 1, 2014
    2. Higher than the carrying amount on January 1, 2014
    3. Higher than the carrying amount on December 31, 2016
    4. Lower than the carrying amount on December 31, 2016

 

 

 

 

 

  1. A five-year term bond was issued by an entity on January 1, 2014 at a discount. The carrying amount of the bond on December 31, 2015 would be

 

    1. Higher than the carrying amount on December 31, 2014
    2. Lower than the carrying amount on December 31, 20114
    3. The same as the carrying as the carrying amount on December 31, 2014
    4. Higher than the carrying amount on December 31, 2016

 

 

  1. Under international accounting, the valuation method used for bond payable

 

    1. Historical cost
    2. Discounted cash flow valuation at current yield rate
    3. Maturity amount
    4. Discounted cash flow valuation at a yield rate at issuance

 

 

 

 

 

Problem 6-3 Multiple choice (IAA)

 

  1. What is the interest rate written on the face of the bond?

 

    1. Coupon rate
    2. Nominal rate
    3. Stated rate

 

    1. Coupon rate, nominal rate or stated rate

 

 

  1. What is the rate of interest actually incurred?

 

    1. Market rate
    2. Yield rate
    3. Effective rate
    4. Market, yield or effective rate

 

 

  1. When the effective interest method is used, the periodic amortization would

 

    1. Increase if the bonds were issued at a discount.
    2. Decrease if the bonds were issued at a premium.
    3. Increase if the bonds were issued at a premium.
    4. Increase if the bonds were issued at either a discount or a premium.

 

 

  1. A discount on bond payable is charged to interest expense

 

    1. Equally over the life of the bond
    2. Only in the year the bond is issued
    3. Using the effective interest method
    4. Only in the year the bond matures

 

 

  1. An entity issued a bond with a stated rate of interest that is less than the effective interest rate. The bond was issued on one of the interest payment dates. What should the entity report on the first interest payment date?

 

    1. An interest expense that is less than the cash payment made to bondholders.
    2. An interest expense that is greater than the cash payment made to bondholders.
    3. a debit to discount on bond payable.
    4. A debit to premium on bond payable.

 

 

Problem 7-1 Multiple Choice (PAS 32)

 

  1. It is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

 

    1. Financial instrument
    2. Equity instrument
    3. Debt instrument
    4. Derivative instrument

 

  1. A financial liability is a contractual obligation

 

  1. To deliver cash or other financial asset to another entity
  2. To exchange financial instruments with another entity under conditions that are potentially unfavorable.

 

    1. I only
    2. II only
    3. Both I and II
    4. Neither I nor II

 

 

  1. It is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities.

 

    1. Equity instrument
    2. Debt instrument
    3. Loan receivable
    4. Financial asset with indeterminable fair value.

 

 

  1. Financial liabilities include all of the following, except

 

    1. Trade accounts payable
    2. Notes payable
    3. Bonds payable
    4. Income taxes payable

 

 

  1. Equity instruments include all of the following, except

 

    1. Ordinary shares
    2. Preference shares
    3. Warrants or options that allow the holder to purchase a fixed number of

 

ordinary shares of the issuing entity in exchange for a fixed amount of cash.

    1. Corporate bonds and other debt instruments issued by the entity.

 

 

  1. Which of the following is not classified as a financial instrument?

 

    1. Convertible bond
    2. Foreign currency contract
    3. Warranty provision
    4. Loan receivable

 

  1. A bond or similar instrument convertible by the holder into a fixed number of ordinary shares of the entity is

 

    1. A compound financial instrument
    2. A primary financial instrument
    3. A derivative financial instrument
    4. An equity instrument

 

 

  1. Which of the following should be considered a financial liability?

 

    1. Deferred revenue
    2. A warranty obligation
    3. A constructive obligation
    4. Redeemable preference share

 

 

  1. What is the principal accounting for a compound financial instrument?

 

    1. The issuer shall classify a compound instrument as either liability or equity based on evaluation of the predominant characteristics of the contractual arrangement.
    2. The issuer shall classify the liability and equity components of a compound instrument separately as financial liability or equity instrument
    3. The issuer shall classify a compound instrument as a liability in its entirety, until converted into equity, unless the equity component is detachable and separately transferable, in which case the liability and equity components shall be presented separately.
    4. The issuer shall classify a compound instrument as a liability in its entirety, until converted into equity.

 

 

  1. How are the proceeds from issuing a compound financial instrument allocated between the liability and equity components?

 

    1. First, the liability component is measured at fair value, and then the remainder of the proceeds is allocated to the equity conponent
    2. First, the equity component is measured at fair value, and then the remainder of the proceeds is allocated to the liability component
    3. First, the fair values of both the equity component and the liability component are estimated. Then, the proceeds are allocated to the liability and equity components based on the relation between the estimated fair value.
    4. The equity component is measured at its intrinsic value. The liability component is measured at the face amount less the intrinsic value of the equity component.

 

 

 

Problem 7-2 Multiple Choice (ACP)

 

  1. When an entity issued bonds payable that can be converted into ordinary shares, what will be the effect on liabilities and equity, respectively?

 

    1. Increase and No effect
    2. Increase and Increase
    3. No effect and Increase
    4. Decrease and Increase

 

 

  1. An entity issued bonds payable with nondetachable share warrants. In computing interest expense for the first year, the effective interest rate is multiplied by the

 

    1. Proceeds received from sale of the bonds
    2. Face value of the bonds
    3. Fair value of the bonds only
    4. Share warrants outstanding

 

 

  1. When an entity issued bonds payable with detachable share warrants, how will share premium be computed if the warrants are exercised by the bondholders?

 

    1. It is the difference between the proceeds received based on the exercised price

 

and the total par or stated value of the shares issued.

    1. It is the difference between the proceeds received based on the exercised price plus the share warrants outstanding and the total par or stated value of the share issued.
    2. It is the sum of the share warrants outstanding and total par or stated value of the shares issued.
    3. It is the balance of the share warrants outstanding.

 

 

 

 

 

  1. When an entity issued convertible bonds, how will share premium be computed if the bonds were converted into ordinary shares?

 

    1. It is the difference between the carrying amount of the bonds and the total par or stated value of the shares issued.
    2. It is the difference between the face value of the bonds and the total par or stated value of the shares issued.
    3. It is the difference between the carrying amount of the bonds plus share premium from conversion privilege and the total par or stated value of the shares issued.
    4. It is the difference between the face value of the bonds plus the share premium from conversion privilege and the total par or stated value of the shares issued.

 

 

  1. The proceeds from a bond issued with share warrants shall be accounted for as

 

    1. Entirely bonds payable
    2. Entirely shareholders' equity
    3. Partly bonds payable and partly unearned revenue
    4. Partly bonds payable and partly shareholders' equity

 

 

 

 

Option 1

Low Cost Option
Download this past answer in few clicks

13.83 USD

PURCHASE SOLUTION

Already member?


Option 2

Custom new solution created by our subject matter experts

GET A QUOTE