3346 Final Exam 2 Questions With
Correct Verified Solutions Scored A+
2025\2026 Edition.
Value current liab at - Answer maturity/face
Value noncurrent liab at - Answer PV of future cash flows
GAAP requires that bond issue costs reduce - Answer net liab
IFRS requires reduction of net liab thus increasing - Answer effective interest rate
Book value is based off - Answer historical cost
Must disclose FMV based on current market rate on - Answer BS
GAAP requires effective interest unless - Answer straight line is not materially different
IFRS requires effective, doesn't allow - Answer SL
SL - Answer amortize premium evenly over remaining life of bond and plug into int exp; rest of
JE's same
Effective - Answer calculate effective int rt for every int exp entry
Zero Coupon end of period - Answer accrue int exp and amortize discount
zero coupon at maturity - Answer net liab = face, pay cash eliminate BP
Bond Retirement at maturity - Answer make final int pmt, discount will be fully amortized after
entry, dec BP and dec Cash for face value
, GAAP and detachable warrants - Answer must allocate portion of FV to bond and detachable
warrants
Convertible Bond GAAP - Answer treat all as a debt issuance
Convertible Bond IFRS - Answer allocation as part of debt and part equity
Book Value method of recording equity - Answer no g/l since eliminating BV debt and
replacing with same value of equity; basis
Market Value method of recording equity - Answer APIC number is different to account for
loss recording; unlikely gain but if mkt value of equity is less than BV of debt retired record a
gain
Induced Conversions - Answer Cost of getting bondholder to convert, FMV, is considered to be
expense at time of conversion
Long term notes payable, record interest using - Answer effective int rt
Long term notes payable, if issued for cash, cash account= - Answer PV of note
Long term notes payable, if issues for property, value at - Answer FMV of stuff or note,
whichever is more reliable. If neither, determine PV of note using incremental borrowing rates
Use stated interest rate unless - Answer none or unreasonable or face of note is materially
different from cash sales price of prop or PV of note
Bonds payable--> must disclose - Answer FMV based on current market rate on BS date
Operating lease off ___ financing - Answer B/S
bargain purchase price must be - Answer reasonably assured
Correct Verified Solutions Scored A+
2025\2026 Edition.
Value current liab at - Answer maturity/face
Value noncurrent liab at - Answer PV of future cash flows
GAAP requires that bond issue costs reduce - Answer net liab
IFRS requires reduction of net liab thus increasing - Answer effective interest rate
Book value is based off - Answer historical cost
Must disclose FMV based on current market rate on - Answer BS
GAAP requires effective interest unless - Answer straight line is not materially different
IFRS requires effective, doesn't allow - Answer SL
SL - Answer amortize premium evenly over remaining life of bond and plug into int exp; rest of
JE's same
Effective - Answer calculate effective int rt for every int exp entry
Zero Coupon end of period - Answer accrue int exp and amortize discount
zero coupon at maturity - Answer net liab = face, pay cash eliminate BP
Bond Retirement at maturity - Answer make final int pmt, discount will be fully amortized after
entry, dec BP and dec Cash for face value
, GAAP and detachable warrants - Answer must allocate portion of FV to bond and detachable
warrants
Convertible Bond GAAP - Answer treat all as a debt issuance
Convertible Bond IFRS - Answer allocation as part of debt and part equity
Book Value method of recording equity - Answer no g/l since eliminating BV debt and
replacing with same value of equity; basis
Market Value method of recording equity - Answer APIC number is different to account for
loss recording; unlikely gain but if mkt value of equity is less than BV of debt retired record a
gain
Induced Conversions - Answer Cost of getting bondholder to convert, FMV, is considered to be
expense at time of conversion
Long term notes payable, record interest using - Answer effective int rt
Long term notes payable, if issued for cash, cash account= - Answer PV of note
Long term notes payable, if issues for property, value at - Answer FMV of stuff or note,
whichever is more reliable. If neither, determine PV of note using incremental borrowing rates
Use stated interest rate unless - Answer none or unreasonable or face of note is materially
different from cash sales price of prop or PV of note
Bonds payable--> must disclose - Answer FMV based on current market rate on BS date
Operating lease off ___ financing - Answer B/S
bargain purchase price must be - Answer reasonably assured
