Question
I've bolded the ones I think are correct. Is anyone able to help me check my answers/give an explanation if they are wrong? Thank you
I've bolded the ones I think are correct. Is anyone able to help me check my answers/give an explanation if they are wrong? Thank you so much!
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Which of the following cash costs is immediately expensed under US GAAP?
- Spent $110,000 for salaries of R&D chemical engineers
- Purchased a trademark from a competitor for $50,000
- Spent $100,000 on the construction of a new multi-purpose R&D laboratory
- Acquired a patent valued at $30,000 as part of a $2 million dollar merger
- All of the above
A company invested in equity securities of another firm. They purchased <1% of voting shares and are thus accounting for these equities as passive investments. In October they bought 100 shares at the price of $80 per share. During the quarter the price of these shares was volatile but they finished the quarter at $90 per share. The securities also paid a dividend of $2 per share once during the quarter. What was the value of this investment on the balance sheet at the end of the quarter?
- $7,800
- $8,000
- $8,800
- $9,000
- $9,200
Which of the following events will create a contingent liability on Verizons balance sheet during the current period?
- Verizon is being sued by AT&T Wireless and legal counsel estimates that it is reasonably possible that Verizon will have to pay $15 million to settle
- Verizon is named as one of the defendants in a class action suit and legal counsel estimates that it is probable that Verizon will have to pay $12 million to settle
- Verizon sues Vonage for patent infringement and legal counsel estimates that it is probable that Verizon will receive $7 million in a settlement
- B and C
- A and B and C
Which one of the following is not true (in a normal environment where risk-free rates are above zero)?
- For bonds issued at discount, the interest expense for the year does not equal the interest cash payment due to the bondholders for the year
- A bond issued at premium has a coupon rate which is higher than the effective market interest rate
- A zero coupon bond is a bond issued at discount
- For bonds issued at discount, the proceeds at issuance are equal to the Face Value of the bond
- All of the above are true
Which of the following statements pertaining to leases longer than 12 months is not true under the current guidance (for the lessee)?
- An operating lease adds an equal asset and liability to the Balance Sheet at inception
- A finance lease adds an equal asset and liability to the Balance Sheet at inception
- A finance lease liability gets reduced every period by the difference between the cash payment and the interest expense
- An operating lease will record a lease/rent expense on the Income Statement every period
- All of the above are true
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