Accounting 230 - 3rd test
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
