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Chapter 14: Long-term Liabilities

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Intermediate Accounting (Kieso)
Pages: 718 - 773

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121 Questions for Chapter 14: Long-term Liabilities

  1. On January 1, 2017, Aumont Company sold 12% bonds having a maturity value of $500,000 for $537,907.37, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Aumont Company allocates interest and unamortized discount or premium on the effective-interest basis.

    Found on Page 756
  2. Karen Austin Inc. has issued three types of debt on January 1, 2017, the start of the company’s fiscal year.

    Found on Page 756
  3. On January 2, 2012, Banno Corporation issued $1,500,000 of 10% bonds at 97 due December 31, 2021. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable “interest method.”)

    Found on Page 756
  4. (Entries for Redemption and Issuance of Bonds) Matt Perry, Inc. had outstanding $6,000,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $9,000,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 11% bonds (with unamortized discount of $120,000) at 102 on August 1.

    Found on Page 756
  5. What is done to record properly a transaction involving the issuance of a non-interest -bearing long-term note in exchange for property?

    Found on Page 753
  6. What are the types of situations that result in troubled debt?

    Found on Page 753
  7. What are the general rules for measuring gain or loss by both creditor and debtor in a troubled-debt restructuring involving a settlement?

    Found on Page 753
  8. (a) In a troubled-debt situation, why might the creditor grant concessions to the debtor?

    Found on Page 753
  9. (b) What type of concessions might a creditor grant the debtor in a troubled-debt situation?

    Found on Page 753
  10. On June 30, 2009, County Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2017. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2018, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30.

    Found on Page 757

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