Question
5.Under ASPE, a contingent liability is recognized in income and as a liability when the liability can be reasonably estimated. the liability is likely to
5.Under ASPE, a contingent liability is recognized in income and as a liability when
the liability can be reasonably estimated.
the liability is likely to be paid.
the liability is both likely to be paid and can be reasonably measured.
contingent liabilities are never recorded.
6.Under the effective interest method, bond interest expense is computed by multiplying the bond's
face value by the effective interest rate.
face value by the stated interest rate.
carrying value by the stated interest rate.
carrying value by the effective interest rate.
7.When bonds sell between interest payment dates, the purchaser will pay the seller
the price of the bonds only.
the price of the bonds less the accrued interest.
the price of the bonds plus the accrued interest.
none of the above.
8.The selling price of a bond is the sum of the present values of the principal and the periodic interest payments. The present values are determined by using the
coupon rate.
stated rate.
nominal rate.
market rate.
9.Stone Inc. issued bonds with a maturity amount of $2,000,000 and a maturity date ten years from the date of issue. If the bonds were issued at a premium, this indicates that
the stated rate of interest exceeded the market rate.
the market rate of interest exceeded the stated rate.
no necessary relationship exists between the two rates.
the market and stated rates coincided.
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