chap 6 Acct

In which of the following situations is present value measurement not used?

*****Taxes.****** Environmental liabilities. Leases. Bonds.

Interest that is computed on principal and any interest earned that has not been paid or withdrawn is:

Compounded Interest, Compound interest is computed on principal and any interest earned

IFRS does not address present value as a measurement basis for leases.

False, Both IFRS and U.S. GAAP address present value as a measurement basis for leases.

Compound interest is computed on the principal only.

False, Compound interest is computed on the principal and on any interest earned, but not paid or withdrawn.

Which table would you use to determine how much you would need to have deposited six years ago at 4% compounded annually in order to have $10,000 today?

Future value of 1 or present value of 1

Which of the following variables are included in the computation of interest?

Interest rate. Principal. Time. All of the above.

Simple Interest:

It is computed on the amount of interest only, it is the return on or growth of the principal for one time period. Interes= p x i x n

GAAP addresses present value as a:

Measurement basis for a broad array of transactions, such as accounts and loans receivalbe, leases, postretirement benefits, asset impairments, and stock-based compensation.

Present Value-Based Accounting Measurements:

Notes Leases Pensions and other Postretirement Benefits. Long-Term Assets Stock-Based compensation Business Combinations Disclousures. Enviromental Liabilities

Which of the following is not a variable that is a part of all compound interest problems?

Past value.

Which of the following has an impact on the dollar amount of the interest related to any financing transaction?

Time.(Number of years that the principal is outstanding) All of the above. Interest rate.(A percentage of the outstanding principal)-(Payment for the use of money) Principal.(The amount borrowed or invested)-(The excess cash received or repaid over and above the amount lent or borrowed)

Bonds are valued using present value-based measurements.

True, Bonds are valued at the present value of the principal and interest payments.

Other factors being equal, the higher the credit risk, the higher the interest rate.

True, Low risk borrowers can obtainloans at or slightly below the going market rate of interest, whereas higher interest rates are charged to clients with higher levels of credit risk.

Compound Interest:

it is computed on principal and on any interest earned that has not been paid or withdrawn

Accounting topics where present value-based accounting measurements are relevant include all of the following except:

leases. long-term assets. ******stockholders' equity.***** sinking funds.