Question
Assume that a corporation needs to enter the private debt market to raise funds for plant expansion. The corporation expects debt covenants to place restrictions
Assume that a corporation needs to enter the private debt market to raise funds for plant expansion. The corporation expects debt covenants to place restrictions on the levels of its current ratio and total-liabilities-to-assets ratio. Considering the accounts that comprise these ratios, examples of accounting estimates and accounting judgments that the lender should examine closely include:
A. adequate allowances for uncollectible accounts
B. consideration of impairment for long-lived tangible assets.
C. proper provisions for loss contingencies and warranties
D. all of the above
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