Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 15, Problem 11RQ
Mansfield Corporation has outstanding an issue of 30-year bonds payable. There is no sinking fund for these bonds. Under what circumstances, if any, should this bond issue be classified as a current liability?
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On January 1 of the current year, an entity issued bonds at discount. The entity incorrectly used the straight line method instead of the effective interest method to amortize the discount. How were the following amounts, as of December 31 of the current year affected by the error? *a. Carrying Amount of Bonds = Overstated; Retained Earnings = Overstatedb. Carrying Amount of Bonds = Understated; Retained Earnings = Overstatedc. Carrying Amount of Bonds = Overstated; Retained Earnings = Understatedd. Carrying Amount of Bonds = Understated; Retained Earnings = Understated
Jones Co. failed to amortize the premium on an outstanding five-year bond issue. What is the resulting effect on interest expense and the bond outstanding balance (book value), respectively?
A. Understated, understated.
B. Understated, overstated.
C. Overstated, understated.
D. Overstated, overstated.
Company A estimated that it will receive less interest payments and principal payments from its Available-for-Sale investments in Company B’s bonds. Company A does not intend to sell the bonds before they will recover. See the information below:
Amortized cost of Company B bonds: $800,000.
Discounted value of estimated payments at the interest rate on the date of bond inception: $650,000.
Fair value of Company B bonds: $400,000.
How will Company A record this assessment?
a.
Company A will debit Credit Loss Expense by $150,000.
b.
Company A will debit loss on impairment by $400,000.
c.
Company A will credit Investment account by $800,000.
d.
Company A will not record this assessment given that the investment is AFS.
e.
Company A will debit Credit Loss Expense by $400,000.
Chapter 15 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 15 - What does the trust indenture used by a...Ch. 15 - Long-term creditors often insist upon placing...Ch. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Mansfield Corporation has outstanding an issue of...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - What do you consider to be the most important...Ch. 15 - What is the primary responsibility of an...Ch. 15 - In the audit of a small corporation that issues...Ch. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Corporations sometimes issue their own capital...Ch. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23RQCh. 15 - Prob. 24RQCh. 15 - Prob. 25RQCh. 15 - Prob. 26RQCh. 15 - Prob. 27QRACh. 15 - Prob. 28QRACh. 15 - Prob. 29QRACh. 15 - You are retained by Columbia Corporation to audit...Ch. 15 - Prob. 31QRACh. 15 - Prob. 32AOQCh. 15 - Prob. 32BOQCh. 15 - Prob. 32COQCh. 15 - Prob. 32DOQCh. 15 - Prob. 32EOQCh. 15 - When a client uses paper stock certificates, an...Ch. 15 - Prob. 32GOQCh. 15 - The auditors can best verify a clients bond...Ch. 15 - Prob. 32IOQCh. 15 - All corporate capital stock transactions should...Ch. 15 - Prob. 32KOQCh. 15 - Prob. 32LOQCh. 15 - Prob. 32MOQCh. 15 - Prob. 32NOQCh. 15 - Prob. 32OOQCh. 15 - An auditor most likely would inspect loan...Ch. 15 - Prob. 32QOQCh. 15 - Match the following definitions (or partial...Ch. 15 - Prob. 34PCh. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37P
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