Quiz 14.07 – T/F Categorization of Bond Payable Premium as a Contra Liability
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
The premium on bonds payable is categorized as a contra liability account.
The premium on bonds payable is categorized as a contra liability account.
When a long-term note is issued at a stated interest rate significantly different from the market rate of interest, an implicit or imputed interest rate must be applied.
Each periodic payment made on an installment note reduces the interest expense.
Issuing bonds payable with detachable stock purchase warrants increases paid-in capital.
When equipment is acquired through a long-term note, how should the cost of the equipment be determined?
How is the present value of future cash flows received on a long-term note recorded in exchange for equipment when the stated rate of interest is indicative of the market rate of interest at the time of the transaction?
How should the exchange of a note with no stated interest rate for a building be accounted for by Warren Peace Bookstore?
How should the exchange of a note with no stated interest rate for a machine be accounted for by AMC?
What happens to the allocation of payment between principal and interest on an installment note for each succeeding payment?
If Red, Inc. had issued an installment note instead of a 5-year note, with four equal payments at the end of each year starting on December 31, 2021, which of the following statements would be true regarding the effective interest rate, annual cash payment, and interest expenses?