1.Which of the following may be classified as "other long-term investments?"

1. Shares of stocks purchased as long-term investment.
2. Bonds acquired to be held as a long-term investment.
3. Treasury shares acquired at a deep discount and expected to be reissued at a future date that exceeds 12 months from the reporting date.
4. Shares of stocks and bonds purchased using funds earmarked for the retirement of a bond issuance.

2.Witt Corp. has outstanding at December 31, 2004, two long-term borrowings with annual sinking fund requirements and maturities as follows:

Sinking fund requirements

Maturities

2003

1,000,000

-

2004

1,500,000

2,000,000

2005

1,500,000

2,000,000

2006

2,000,000

2,500,000

2007

2,000,000

3,000,000

8,000,000

9,500,000

In the notes to its December 31, 2004 balance sheet, how should Witt report the above data?

1. No disclosure is required.
2. Only sinking fund payments totaling 8,000,000 for the next five years detailed by year need be disclosed.
3. Only maturities totaling 9,500,000 for the next five years detailed by year need to be disclosed.
4. The combined aggregate of 17,500,000 of maturities and sinking fund requirements detailed by year should be disclosed.

3.On March 1, 2001, a company established a sinking fund in connection with an issue of bonds due in 2013. At December 31, 2003, the independent trustee held cash in the sinking fund account representing the annual deposits to the fund and the interest earned on those deposits. How should the sinking fund be reported in the company's balance sheet at December 31, 2003?

1. The cash in the sinking fund should appear as a current asset.
2. Only the accumulated deposits should appear as a noncurrent asset.
3. The entire balance in the sinking fund account should appear as a current asset.
4. The entire balance in the sinking fund account should appear as a noncurrent asset.

4.An issuer of bonds uses a sinking fund for the retirement of the bonds. Cash was transferred to the sinking fund and subsequently used to purchase investments. The sinking fund

1. is increased by the income earned on the investments.
2. is not affected by the income earned on the investments.
3. decreased when the investments are purchased.

a. I only.b. I and III.c. II and III.d. III only.

5.An increase in the cash surrender value is accounted for as

1. income recognized in profit or loss.
2. income recognized in other comprehensive income.
3. reduction to insurance expense.
4. none of these.