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Take Test3.33 points QUESTION 3 1. On October 31, 2011, CPA Co. borrowed $16 million cash and issued a 7-month, noninterest-bearing note. The loan was made by The Finance Co. whose stated discount rate is 8%. CPA's effective interest rate on this loan is: More than the stated discount rate of 8%. Less than the stated discount rate of 8%. Equal to the stated discount rate of 8%. Unrelated to the stated discount rate of 8%. 3.33 points QUESTION 5 1. Which of the following is not a current liability? 3.33 points Accounts payable Interest due in six months on a 10 year note payable Accrued taxes payable All are current liabilities 3.33 points 3.33 points QUESTION 24 1. Consider the following: A company issued $10,000,000 in bonds on January 1, year 1. The terms are: 10 year with interest paid semiannually. Refer to the following schedule. Payment Cash Effective Interest Decrease in Balance Outstanding Balance 11,487,747 1 400,000 344,632 55,368 11,432,379 2 400,000 342,971 57,029 11,375,350 3 400,000 341,261 58,739 11,316,611 What is the stated annual rate of interest on the bonds 3 percent 4 percent 6 percent 8 percent 3.33 points QUESTION 25 1. Consider the following: A company issued $10,000,000 in bonds on January 1, 2011. The terms are: 10 year with interest paid semiannually. Refer to the following schedule. Payment Cash Effective Interest Decrease in Balance Outstanding Balance 11,487,747 1 400,000 344,632 55,368 11,432,379 2 400,000 342,971 57,029 11,375,350 3 400,000 341,261 58,739 11,316,611 What is the interest expense on the bonds in 2012? $800,000. $680,759. $342,961. None of the above 3.33 points QUESTION 26 1. Consider the following: A company issued $10,000,000 in bonds on January 1, year 2011. The terms are: 10 year with interest paid semiannually. Refer to the following schedule. Payment Cash Effective Interest Decrease in Balance Outstanding Balance 11,487,747 1 400,000 344,632 55,368 11,432,379 2 400,000 342,971 57,029 11,375,350 3 400,000 341,261 58,739 11,316,611 What would be the total interest expense recognized for the bond issue over its full term? $6,512,253. $8,000,000. $11,256,109. $11,487,747. 3.33 points QUESTION 27 1. Consider the following: A company exchanged some equipment and was classified as having commercial substance. Book Value Fair Value Cash Received Case One $75,000 $80,000 $12,000 Case Two $60,000 $56,000 $10,000 In Case One the company would record the new equipment at $68,000 $63,750 $67,250 None of the above 3.33 points QUESTION 28 1. Consider the following: A company exchanged some equipment and was classified as having commercial substance. Book Value Fair Value Cash Received Case One $75,000 $80,000 $12,000 Case Two $60,000 $56,000 $10,000 Refering to Case Two the company will record a gain or loss of how much? $4,000 gain $4,000 loss $10,000 loss None of the above 3.33 points 3.33 points QUESTION 30 1. CPA, Inc. exchanged equipment and $18,000 cash for similar equipment. The book value and the fair value of the old equipment were $82,000 and $90,000, respectively. Assuming that the exchange does not have commercial substance, CPA will record a gain/(loss) of how much? $26,000 gain $8,000 loss $8,000 gain No gain or loss
