Which method involves the larger adjustment in the Cash Flow Statement (prepared under the indirect method) to net income in deriving funds provided by operations in the first year for a bond issued at more than par value Multiple Choice   All the three statements about bonds are correct   effective interest method of accounting for interest expense on bonds   declining balance method of accounting for interest expense on bonds   straight-line method of accounting for

Reporting Issuance and Retirement of Long-Term Debt On the basis of the details of the following bonds payable and related discount accounts, indicate the items to be reported in the Financing Activities section of the statement of cash flows, assuming no gain or loss on retiring the bonds: ACCOUNT Bonds Payable ACCOUNT NO. Balance Date Debit Credit Jan. 1 Balance Retire bonds 112,000 June 30 Issue bonds ACCOUNT Discount on Bonds Payable Date Item Balance Retire bonds Issue bonds Amortize discount Jan. 1 2 June 30 Dec. 31 Item Debit 22,500 336,000 Credit 8,960 1,940 Debit Credit 560,000 448,000 784,000 ACCOUNT NO. Balance Debit 25,200 16,240 38,740 36,800 Credit

Which method gives higher interest expense in the last year when the bonds are issued for more than par? Multiple Choice   None of the other alternatives are correct   effective interest method of accounting for interest expense on bonds   straight-line method of accounting for interest expense on bonds   declining balance method of accounting for interest expense on bonds   All the three statements about bonds are correct

ll of the following are differences between IFRS and GAAP in accounting for liabilities except: a.    When a bond is issued at a discount, GAAP records the discount in a separate contra liability account. IFRS records the bond net of the discount. b.    Under IFRS, bond issuance costs reduce the carrying value of the debt. Under GAAP, these costs are recorded as an asset and amortized to expense over the terms of the bond. c.    GAAP, but not IFRS, uses the term “troubled-debt restructurings.” d.    GAAP, but not IFRS, uses the term “provisions” for contingent liabilities which are accrued

Indicate the proper financial statement classification for each of the following accounts:   Financial Statement Statement Classification Discount on Long-term Bonds Payable Answer   Answer   Mortgage Notes Payable Answer Answer Long-term Bonds Payable Answer Answer Bond Interest Expense Answer Answer Bond Interest Payable Answer Answer Premium on Long-term Bonds Payable Answer