1. Bonds maturing on a single date are calledA. callable bondsB. debenture bondsC. serial bondsD. term bonds2. Bonds payable are initially recognized atA. issue price minus transaction costs incurred by the entity.B. issue priceC. issue price plus accrued interestD. face value3. For accounting purposes, interest expense recognized on bonds payable should be based ontheA. effective interest rate, considering the issue price and the transaction costs.B. nominal interest rate.C. rate stated on the face of the bonds.D. market rate of interest on the reporting date.4. Bonds bearing an interest rate of 8% were issued above their face value. This implies that themarket rate of interestA. at date of issue is equal to 8%.B. at date of issue is higher than 8%.C. at date of issue is lower than 8%D. at the reporting date is higher than 8%.5. How should the issue price of the bonds with non-detachable share warrants be accountedfor?A. The proceeds are fully assigned to the bonds.B. the proceeds shall ne assigned first to the warrants, at their market value and theremained to the bonds.C. The proceeds shall be assigned first to the bonds at their market value if sold withouthe warrants; then the remained of the issue price is assigned to the warrants as part ofequity.D. The proceeds shall be allocated to the bonds and to the warrants based on the relativefair values.6. Sun Corp. markets a 10-year bond issue dated January 1, 2018. The bonds pay interest semi-annually on January 1 and July 1. If these bonds are sold on August 1, 2018, how many monthsaccrued interest must be paid by the purchaser and over how many months would any discounton the bonds be amortized?A. Accrued interest- 7 month; Amortization period- 120 monthsB. Accrued interest- 7 month; Amortization period- 113 monthsC. Accrued interest- 1 month; Amortization period- 120 monthsD. Accrued interest- 1 month; Amortization period- 113 months7. Under the effective interest method of amortizing bond premium on term bonds,A. interest expense remains the same for each period.B. interest rate varies from period to period.C. interest expense increases each period.D. interest expense decreases each period.8. The proceeds from a bond issued with detachable share warrants should be accounted forA. entirely as bonds payableB. entirely as shareholders' equityC. partly as unearned revenue and partly as bonds payableD. partly as liability for bonds payable and partly as shareholders' equity for the warrants.9. Bond premium should be reported in the statement of financial position A. along with other premium accounts such as those resulting from stock transactions.B. as deferred credit.C. as a direct addition to the face amount of the bonds.D. as a deduction from the face of the bonds.10. How would the carrying amount of the bonds be affected by the amortization of discount andpremium, respectively?A. No effect; No effectB. Increase; No effectC. Increase; DecreaseD. Decrease; Increase11. Bonds with face value of P5,000,000 carrying a stated interest rate of 12% payablesemiannually on March 1 and September 1 were issued on July 1. The total proceeds from theissue amounted to P5,200,000. The best explanation for the excess amount received over theface value is thatA. the bonds were sold at a premium.B. the bonds bear an interest rate lower than the market rate of interest at the date of bondissuance.C. the bonds were issued at face value plus accrued interest.D. the bonds were sold at a discount plus accrued interest.12. BTS Company failed to amortize discount on outstanding 10-year bonds payable. What is theeffect of the failure to record amortization on interest expense, profit and bond carrying value,respectively?A. understate, overstate, understateB. overstate, understate, overstateC. understate, overstate, overstateD. overstate, understate, understate13. The market price of a bond issued at a premium is the present value of its principal amountat the effective interestA. plus the present value of all future interest payments at the effective interest rate.B. plus the present value of all future interest payments at the stated interest rate on bond.C. minus the present value of all future interest payments at the effective interest rate.D. plus total amount of all future interest payment.14. When corporation issues a callable bond, this means that theA. investors may convert bonds held to cash at his or her option.B. issuer may retire the bond by paying a specified call price during a specified period.C. issuer may retire the bonds by paying a specified market price at the open market atany point in the life of the bondD. issuer may convert the bonds to some form of equity security during a specified period.15. Which of the following statements is incorrect regarding troubled debt restructuring?A. In modification of terms, when the total discounted cash flows under the new termsexceed the carrying value of the debt, a gain on debt restructuring is recognized in profitor loss if the discounted present value of the new terms is at least 10% different from thecarrying value of the old obligation.B. Any difference between the carrying value of the debt settled and the carrying value ofthe asset transferred shall be taken to the profit or loss during the period of the debtsettlement.C. In debt restructuring where shares of equity instruments are granted to settle anobligation, the excess of the carrying value of the debt settle over the fair value of theshares issued shall be taken to the profit or loss during the period of debt settlement.D. In modification of terms, the debtor recognizes interest expense after the debtrestructuring based on the interest rate of the old debt.

Hi student Since there are multiple questions, we will answer only first question.

Answered: 1. Bonds maturing on a single date are…

Business

Accounting

1. Bonds maturing on a single date are called A. callable bonds B. debenture bonds C. serial bonds D. term bonds

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

What are bonds classified as?
Bonds that may be redeemed prior to maturity at the option of the issuer are called a. early retirement bonds b. options c. callable bonds d. debentures
G, the Manager of ABC Co., was given a fringe benefit of a Household Expense account for the salary of his driver and other personal expenses in the amount of P20,000 per month for the current year. Compute the following: 1) Grossed Up Monetary of the Fringe Benefits 2) Fringe Benefits Tax Payable 3) If G is employed in an Offshore Banking unit, compute the fringe Benefits Tax. Upload your solutions in Spreadsheet Format.
Discuss different types and characteristics of debt instruments with specific reference of Bonds.
Show ful calculation for Bond A and Bond B
The effective interest method of amortizing bonds allocates the same amount of expense to each period true false
Which of the following would NOT be included in the journal entry to show the conversion of bonds payable? O A credit to additional paid in capital O A debit to bonds payable O A debit to bond premium O A credit to gain on conversion
When bonds are issued at a discount and the effective interest method is used for amortization, at each successive interest payment date, the interest expense: Select one: a. Increases b. Is equal to the change in market value of the bonds c. Decreases d. Is equal to the change in carrying value of the bonds e. Stays the same
Bonds have several unique terms and features. Required: BRIEFLY describe or provide example(s) of the following bond terms and features: A. Put bonds B. Protective covenants C. Sinking fund
The carrying value of Bonds Payable equalsa. Bonds Payable plus Discount on Bonds Payable.b. Bonds Payable minus Discount on Bonds Payable.c. Bonds Payable minus Premium on Bonds Payable.d. Bonds Payable plus Accrued Interest.
Callable bonds are the bonds which are redeemed after fixed no. of years. T/F?
When does a premium on bonds payable occur?