Govenments are prevented from barrowing unlimited funds through the enforcement of debt limits. Explain the concept of a debt limit. How is the concept of barrowing power or debt margin connected to debt limits

Q: (a) In a troubled-debt situation, why might the creditorgrant concessions to the debtor?(b) What…

A: (a)The creditor mostly grants the borrower with certain concessions with regard to the settlement.…

Q: Governments are prevented from borrowing unlimited funds through the enforcement of debt limits.…

A: Debt limit refers to the limit on the debt that a government can borrow. It shows the limits of…

Q: Short-term debt should be excluded in the estimation of WACC if it is a permanent source of…

A: B.'False' is an incorrect answer as WACC full form is the weighted average cost of capital and if it…

Q: What type of concessions might a creditor grant the debtor in a troubled-debt situation?

A: Debt is the amount owed by the company for a particular period from the date of the company's…

Q: What evidence is necessary to demonstrate the ability to defer settlement of short-term debt?

A: Short-term debt: Short-term debt refers to the current liability of an organization. This means that…

Q: How are the activities of Debt Service Funds controlled?

A: Debt service fund: Debt service fund is the fund created to ensure no delay or failure in the…

Q: what is the best provisioning methodology in loan impairement and why?

A: Impairment refers to a reduction in an asset's value. It's similar to depreciation but it's applied…

Q: Which of the following is a reason that banks may favor fee compensation over balance compensation?…

A: In order to increase their deposits and use them for loan, banks usually prefer fee compensation…

Q: How would the transactions be reconciled if the allowance for bad debt is converted to a bad debt…

A: This question said that The company made the provision or provided for allowance for bad debt as per…

Q: QUESTION 3 AA Sdn Bhd provides for doubtful debts at 3% of outstanding debtors at his year end of 31…

A:

Q: Debt covenants are least likely to place restrictions on the issuer’s ability to:A . pay dividends.B…

A: Introduction: Debt covenants are arrangements between a corporation and a creditor normally defining…

Q: What are the general rules for measuring and recognizing gain or loss by a debt extinguishment with…

A: Long-term liabilities   Long-term liabilities are obligations that the company needs to pay after at…

Q: What are some possible agency conflicts between borrowers and lenders?

A: Answer: Agent: An agent is one who provides work on principal’s behalf.  Principal authorizes agent…

Q: explain the derecognition of debt;

A: Derecognition of debt As bonds are issued, then an entity may leave a bond that is outstanding till…

Q: What tools are available for solving adverse selection and moral hazard problems in debt contracts…

A: There may arise various problems like adverse selection and moral hazards problem in equity and debt…

Q: Explain Issuance of loans to unworthy entities with examples

A: Issuance of loan to unworthy entities means granting of loans to the entities having a poor…

Q: When should a debt security be classified as held-tomaturity?

A: Debt securities: Debt security is money borrowed at a specific rate of interest which must be repaid…

Q: What are the two best arguments favor debt reduction (i.e., the pros)?

A: Debt financing indicates the mode of raising funds from the outside in return for timely loan…

Q: What are bad debt and its types?

A: Bad debt is the assertion made by an organisation that the amount owed by the client cannot be…

Q: What are the benefits of using debt security?

A: The financial instruments which are bought by investors, or corporations, or mutual funds, are…

Q: Which of the following is not a reason for the issuance of long-term liabilities? Debt financing…

A: Long term liabilities are interest bearing securities that are to be repaid over a period of more…

Q: What is the main purpose of loan loss provisioning? Explain the concepts of incurred loss model and…

A: The loan loss provision is the cash reserve created by the banks for the future credit risk. The…

Q: In a troubled-debt situation, why might the creditor grant concessions to the debtor?

A: Creditor: Creditor is a person or a company who has provided fund or loan, and hence, have a claim…

Q: Which of the following case would allow the capitalization of  Interest Expense     No Case allows…

A: Interest will be capitalised only when the concerned assets is under preparation for its use in…

Q: What concerns are there regarding the Paycheck Protecting Program and the Main Street Lending…

A: Paycheck Protecting Program: It is the program launched to protect the salary of employees being…

Q: Identify and define the nonbankruptcy compromises between debtors and creditors.

A: Non-bankruptcy compromises :           There are some compromises available to the parties related…