Accounting 230 - 3rd test

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Patents

An exclusive right to manufacture a product or to use a process (20 years)

Convertible Bonds

Are retired when the bondholder exchanges them for the issuing company's stock

Return on assets formula

Net income/average total assets

Return on equity ratio

net income/average shareholders equity

Straight line depreciation

Assets cost - Residual value / service life

Interest expense

carrying value of bond x market interest rate per period

Declining - Balance depreciation

depreciation schedule - double -declining balance

Time interest earned ratio

(net income + interest expense + tax expense)/ interest expense

Formula for return on equity

net income/average total share holders equity or average stockholders equity

Copyright

AN exclusive right of protection given by the U.S. copyright office to the creator of a published work such as a song, film, painting photograph, book or computer software (70 years after death)

Callable Bonds

Allows the borrower to repay teh bonds before their scheduled maturity date at a specified call price

Service life

How long the company expects to recieve benefits from the asset before disposing of it

Trademark

Is a word, slogan or symbol that distinctively identifies a company, product or service (10 years - in unlimited increments)

Franchises

Local outlets that pay for the exclusive right to use the franchisor company's name and to sell its product within a specified geographical area (agreed time frame)

Term Bonds

Require payment of the full principal amount of the bond as a single maturity date

Serial Bond

Requires payments in installments over a series of years

debt to equity ratio

Total liabilities/stockholders equity


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