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"I'm substance defeasance" is a term used to refer to an arrangement whereby

A company provides for the future repayment of a long term debt by placing purchased securities in an irrevocable trust

The generally accepted method of accounting for gains or losses from an early extinguishment of debt treats any gain or loss as

A difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemption

An early extinguishment of bonds payable, which were originally issued at a premium, is made by purchase of the bonds between interest dates. At the time of reacquisition a. any costs of issuing the bonds must be amortized up to the purchase date. b. the premium must be amortized up to the purchase date. c. interest must be accrued from the last interest date to the purchase date. d. all of these.

All of these

When a note payable is exchanged for property, goods, or services, the stated interest rate is presumed to be fair unless a. no interest rate is stated. b. the stated interest rate is unreasonable. c. the stated face amount of the note is materially different from the current cash sales price for similar items or from current fair value of the note. d. any of these.

Any of these

Bonds for which the owners names are not registered with the issuing corporation are called?

Bearer bonds

The covenants and other terms of the agreement between the issuer of bonds and the lenders are set forth in the

Bond indenture

A bond for which the issuer has the right to call and retire the bonds prior to maturity is a

Callable bond

The interest rate written in the terms of the bond indenture is known as the

Coupon rate, nominal rate, or stated rate

Crane company issued 95k of 10 year, 8% bonds that pay interest semiannually. The bonds are sold to yield at 6%

Double periods half yield

A long term note is valued at its

Present value

Which of the following must be disclosed relative to long-term debt maturities and sinking fund requirements?

The amount of future payments for sinking fund requirements and long-term debt maturities during each of the next 5 years

A corporation borrowed money from a bank to build a building. The long-term note signed by the corporation is secured by a mortgage that pledges title to the building as security for the loan. The corporation is to pay the bank $80,000 each year for 10 years to repay the loan. Which of the following relationships can you expect to apply to the situation? a. The balance of mortgage payable at a given balance sheet date will be reported as a long-term liability. b. The balance of mortgage payable will remain a constant amount over the 10-year period. c. The amount of interest expense will decrease each period the loan is outstanding, while the portion of the annual payment applied to the loan principal will increase each period. d. The amount of interest expense will remain constant over the 10-year period.

The amount of interest expense will decrease each period the loan is outstanding, while the portion of the annual payment applied to the loan principal will increase each period

which of the following arguments is presented by FASB to explain why a gain is recorded by a company when its creditworthiness is becoming worse?

The debtholders' loss is the shareholders gain

A debt instrument with no ready market is exchanged for property whose fair value is currently indeterminable. When such transaction takes place

The present value of the debt instrument must be approximated using an imputed rate

If a company chooses the fair value option, a decrease in the fair value of the liability is recorded by crediting a. Bonds Payable. b. Gain on Restructuring of Debt. c. Unrealized Holding Gain/Loss-Income. d. None of these.

Unrealized holding gain/loss- income

An example of an item which is not a liability is

a. dividends payable in stock.

Premium on bonds payable is

an adjunct account

When the effective- interest method is used to amortize bond premium or discount, the periodic amortization will

increase if the bonds were issued at either a discount or premium