Bond issue costs are capitalized as a deferred charge and amortized to expense over the life of the bond issue.
Answer: True
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Accounting Chapter 14
- The debt to total assets ratio is computed by dividing
- The times interest earned ratio is computed by dividing
- Note disclosures for long-term debt generally include all of the following except
- Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?
- Long-term debt that matures within one year and is to be converted into stock should be reported
- When a business enterprise enters into what is referred to as off-balance-sheet financing, the company
- Which of the following is an example of "off-balance-sheet financing"?
- Discount on Notes Payable is charged to interest expense
- When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless
- When a note payable is issued for property, goods, or services, the present value of the note is measured by
- A debt instrument with no ready market is exchanged for property whose fair market value is currently indeterminable. When such a transaction takes place
- A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation?
- "In-substance defeasance" is a term used to refer to an arrangement whereby
- The generally accepted method of accounting for gains or losses from the early extinguishment of debt treats any gain or loss as
- An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition
- Treasury bonds should be shown on the balance sheet as
- The printing costs and legal fees associated with the issuance of bonds should
- Theoretically, the costs of issuing bonds could be
- When the interest payment dates of a bond are May 1 and November 1, and a bond issue is sold on June 1, the amount of cash received by the issuer will be
- If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
- When the effective-interest method is used to amortize bond premium or discount, the periodic amortization will
- Under the effective-interest method of bond discount or premium amortization, the periodic interest expense is equal to
- If bonds are initially sold at a discount and the straight-line method of amortization is used, interest expense in the earlier years will
- Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity ten years from date of issue. If the bonds were issued at a premium, this indicates that
- Fox Co. issued $100,000 of ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. Another step in calculating the issue price of the bonds is to
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