89.
Husky Corporation is looking to purchase a building costing $500,000 by agreeing to make
payments every three months for the next five years. The first payment is due three months
after the purchase date. Husky’s incremental borrowing rate is 12%. Each of the payments is
closest to:
90.
Huck Corporation is looking to purchase a truck costing $49,000 by agreeing to make
payments every three months for the next two years. The first payment is due three months
after the purchase date. Huck’s incremental borrowing rate is 8%. Each of the payments is
closest to:
91.
You have been asked to compute the cash equivalent price of a machine assuming the cost
(including principal and interest) is to be paid in two unequal payments after the acquisition
date. Which of the following table values would be used to find the cost of the machine?
92.
Straight Industries purchased a large piece of equipment from Curvy Company on January 1,
2016. Straight Industries signed a note, agreeing to pay Curvy Company $400,000 for the
equipment on December 31, 2018. The market rate of interest for similar notes was 8%. The
present value of $400,000 discounted at 8% for three years was $317,520. On January 1, 2016,
Straight Industries recorded the purchase with a debit to equipment for $317,520 and a credit
to notes payable for $317,520.
On December 31, 2016, Straight recorded an adjusting entry to account for interest that had
accrued on the note. Assuming no adjusting entries have been made during the year, the
interest expense accrued at December 31, 2016 is closest to:
93.
Straight Industries purchased a large piece of equipment from Curvy Company on January 1,
2016. Straight Industries signed a note, agreeing to pay Curvy Company $400,000 for the
equipment on December 31, 2018. The market rate of interest for similar notes was 8%. The
present value of $400,000 discounted at 8% for three years was $317,520. On January 1, 2016,
Straight Industries recorded the purchase with a debit to equipment for $317,520 and a credit
to notes payable for $317,520.
On Straight Industries’ balance sheet for the year ended December 31, 2016, the book value of
the liability for notes payable, including accrued interest would be closest to:
94.
Straight Industries purchased a large piece of equipment from Curvy Company on January 1,
2016. Straight Industries signed a note, agreeing to pay Curvy Company $400,000 for the
equipment on December 31, 2018. The market rate of interest for similar notes was 8%. The
present value of $400,000 discounted at 8% for three years was $317,520. On January 1, 2016,
Straight Industries recorded the purchase with a debit to equipment for $317,520 and a credit
to notes payable for $317,520.
How much is the 2017 interest expense, assuming that the December 31, 2016 adjusting
entry was made?
95.
Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a
note agreement with Kenworthy on January 1, 2016. Alden financed $37,908,000, and the note
agreement will require $10 million in annual payments starting on December 31, 2016 and
continuing for a total of four more years (final payment December 31, 2020). Kenworthy will
charge Alden Trucking Company the market interest rate of 10% compounded annually.
On January 1, 2016, Alden will record a note payable in the amount of:
96.
Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a
note agreement with Kenworthy on January 1, 2016. Alden financed $37,908,000, and the note
agreement will require $10 million in annual payments starting on December 31, 2016 and
continuing for a total of four more years (final payment December 31, 2020). Kenworthy will
charge Alden Trucking Company the market interest rate of 10% compounded annually.
Upon the first payment of the note on December 31, 2016, the amount of interest expense to
be recorded is:
97.
Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a
note agreement with Kenworthy on January 1, 2016. Alden financed $37,908,000, and the note
agreement will require $10 million in annual payments starting on December 31, 2016 and
continuing for a total of four more years (final payment December 31, 2020). Kenworthy will
charge Alden Trucking Company the market interest rate of 10% compounded annually.
The amount of principal that is paid at December 31, 2016 is:
98.
Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a
note agreement with Kenworthy on January 1, 2016. Alden financed $37,908,000, and the note
agreement will require $10 million in annual payments starting on December 31, 2016 and
continuing for a total of four more years (final payment December 31, 2020). Kenworthy will
charge Alden Trucking Company the market interest rate of 10% compounded annually.
After the first payment was made, the note payable liability on December 31, 2016 is closest
to:
99.
Alden Trucking Company is replacing part of its fleet of trucks by purchasing them under a
note agreement with Kenworthy on January 1, 2016. Alden financed $37,908,000, and the note
agreement will require $10 million in annual payments starting on December 31, 2016 and
continuing for a total of four more years (final payment December 31, 2020). Kenworthy will
charge Alden Trucking Company the market interest rate of 10% compounded annually.
What is the amount of the 2017 interest expense?
100.
A company’s income statement reported net income of $40,000 during 2016. The income tax
return excluded a revenue item of $3,000 (reported on the income statement) because under
the tax laws the $3,000 would not be reported for tax purposes until 2017. Which of the
following statements is correct assuming a 35% tax rate?
101.
A company’s income statement reported net income of $80,000 during 2016. The income tax
return excluded a revenue item of $6,000 (reported on the income statement) because under
the tax laws the $6,000 would not be reported for tax purposes until 2017. Which of the
following statements is incorrect assuming a 35% tax rate?
102.
A company’s 2016 income tax return reported a $75,000 tax liability. During 2016, the deferred
income tax liability account increased $9,000. Which of the following statements is correct?
103.
If income tax expense reported on the income statement is $45,000 for 2016, and the tax
return for 2016 (the first year) shows an income tax liability of $42,000, the deferred income
tax on the balance sheet at the end of 2016 will be which of the following? Assume a 40% tax
rate.
104.
You have a goal of having $100,000 five years from today. The return on the investment is
expected to be 10% and will be compounded semi-annually. The amount that needs to be
invested today is closest to:
105.
Which of the following correctly describes the accounting for leases?
106.
Which of the following questions is asked with respect to determining the accounting for
leases?
107.
Which of the following questions is incorrect with respect to determining the accounting for
leases?
108.
Your goal is to be able to withdraw $5,000 for each of the next ten years beginning one year
from today. The return on the investment is expected to be 12%. The amount that needs to be
invested today is closest to:
109.
Your goal is to be able to withdraw $10,000 for each of the next nine years beginning one year
from today and also to withdraw $50,000 ten years from today. The return on the investment
is expected to be 6%. The amount that needs to be invested today is closest to:
110.
A loan supported by an agreement to transfer ownership of assets if the loan is not repaid is
called a:
111.
When a company has debt coming due and wants to refinance and classify the debt as a long–
term liability rather than paying for it currently with cash:
112.
With regard to reporting contingent liabilities on a balance sheet, financial statements
prepared under International Financial Reporting Standards (IFRS) will: