1. Answer the following:

a) We have a $1,000, 8-year, 5% bond that is currently priced at 104 (104% of the par value or $1,040). We can calculate the current yield on this bond by solving for the discount rate.

Select one:

True

False

b) The increase in pension obligation due to an employee working an additional year for the employer will cause the net pension liability on the balance sheet to increase but have no direct effect on the income statement.

Select one:

True

False

c) For a lease that is accounted for as an operating lease by the lessee, the rent expense should be:

a. allocated and recorded as interest expense and depreciation expense.

b. allocated and recorded as a reduction in the liability for leased assets and interest expense.

c. recorded as rent expense with no other entries recorded.

d. recorded as a straight-line lease expense with associated entries to record cash payment, reduce the liability, and amortize the right-of-use asset on the balance sheet.