Multiple Choice Questions 1. Excluding a short-term obligation from current liabilities can be done when a) the lability is contractually due to be settled more than one year after the balance sheet date b) the company enters into a finaneing agreement that permits the company to refinance the debt on a long-lerm basis e) the company has a contractual right to defer setlement of the liability for at least one year after the balance sheet date d) al of these answers are correct 2. Paige Co. took advantage of market conditions to refund debt. This was the fourth refunding operation carried out by Paige within the last three years. The excess of the carrying amount of the old debt over the amount paid to extinguish it should be reported as a: - adeferred credit to be amortized over the life of the new debt b) gain, net of income taxes. c) loss, net of income taxes d) part of continuing operations 3. A debt instrument with no ready market is exchanged for property whose fair value is currently indeterminable. When such a transaction takes place a) it should not be recorded on the books of either party until the fair value of the property becomes evident b) the board of directors of the entity receiving the property should estimate a value for the property that wil serve as a basis for the transaction c) the direetors of both entities involved in the transaction should negotiate a value to be assigned to the property. d) the present value of the debt instrument must be approximated using an imputed interest rate. 4. Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements? a) The amount of scheduled interest payments on long-term debt during each of the next five years b) The present value of seheduled interest payments on long-lerm debt during each of the next live years. c) The prescnt value of future payments for sinking fund requirements and long-term debt maturitics during cach of the next five years d) The amount of future payments for sinking fund requirements and long-term debt maturities during each of the next five years