Intermediate Accounting 2- Exam 1 (Chapters 13, 14, and 15) questions and answers verified and updated.
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Course
Intermediate Accounting 2
Institution
Intermediate Accounting 2
Intermediate Accounting 2- Exam 1 (Chapters 13, 14, and 15) questions and answers verified and updated.
$1,600,000 - correct answers.Parton owes $2 million that is due on February 28. The company borrows $1,600,000 on February 25 (5-year note) and uses the proceeds to pay down ...
Intermediate Accounting 2 - Exam 1 (Chapters 13, 14, and 15) questions and answers verified and updated. $1,600,000 - correct answers.Parton owes $2 million that is due on February 28. The company borrows $1,600,000 on February 25 (5 -year note) and uses the proceeds to pay down the $2 million note and uses other cash to pay the balance. How much of the $2 mil lion note is classified as long -term in the December 31 financial statements. -$1,600,000 -$0 -$400,000 -$2,000,000 Obligation must be due with one year - correct answers.Which of the following is not a condition necessary to exclude a short -term obligati on from current liabilities? Vested rights are not contingent upon an employee's future service - correct answers.In accounting for compensated absences, the difference between vested rights and accumulated rights is that: When the future events are prob able to occur and the amount can be reasonably estimated - correct answers.When is a contingent liability recorded? State unemployment taxes - correct answers.Which of the following taxes does not represent a common employee payroll deduction? Debit Natu ral Gas Facility for $8,000,000 and credit Asset Retirement Obligation for $8,000,000 - correct answers.Xtra Processes is involved with innovative approaches to finding energy reserves. Xtra recently built a facility to extract natural gas at a cost of $15 million. However, Xtra is also legally responsible to remove the facility at the end of its useful life in twenty years. This cost is estimated to be $21 million (the present value of which is $8 million). What is the journal entry required to record the asset retirement obligation? Present values are used to measure certain liabilities - correct answers.What is the relationship between present value and the concept of a liability? Current Liabilities - correct answers.Among the short -term obligations of Larsen Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Dennison National Bank. These are 90 -day notes, renewable for another 90 -day period. These notes should be classified on the balance sheet of Larsen company as $148,000 - correct answers.During 2013, Salton Co. introduced a new line of machines that carry a three -year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 3% in the year after sales, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three -year period were as follows: (assume the accrual method) Should be reported as part current and part long -term - correct answers.Ass ume that a manufacturing corporation has (1) good quality control, (2) a one -year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted i n material but rather stable warranty repair and replacement costs. Any liability for the warranty $16,450 - correct answers.Posner Co. is a retail store operating in a state with a 7% retail sales tax. The retailer may keep 2% of the sales tax collected. Posner Co. records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $251,450. Inventory - correct answers.Each of the following are included in both the current ratio and the acid -test ratio except Balance sheet as an item of stockholders' equity - correct answers.Stock dividends distributable should be classified on the 7.53% - correct answers.The effective interest on a 12 -month, zero -interest -bearing note payable of $300,000, discounted at the bank at 7% is All of these. (Employee rights vest or accumulate, payment is probable, and amount can be reasonably estimated) - correct answers.Which of the following gives rise to the requirement to accrue a liability for the cost of compensated absences? The cause for action occurred during the accounting period covered by the financial statements - correct answers.Darren Company become s aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should be reported in the financial statements if the amount can be reasonably estimated, an unfavorable outcome is highly probable, a nd
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