Author: Anonymous

Depreciation does not measure the decline in market value of an asset each period.

Collateral from unsecured loans may be sold to offset the loan obligation if the loan is in default.

Amortizing a bond discount:

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset’s useful life, when it is the same.

A contingent liability is:

The cost of land would not include:

Collateral from unsecured loans may be sold to offset the loan obligation if the loan is in default.

Marwick Corporation issues 8%, 5-year bonds with a par value of $1,000,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%. What is the bond’s issue (selling) price, assuming the following Present Value factors:   n=   i=   Present Value of an Annuity   Present value of $1 5   8 %     3.9927   0.6806 10   4 %     8.1109   0.6756 5   6 %     4.2124   0.7473 10   3 %     8.5302   0.7441

On January 1, a company issues bonds dated January 1 with a par value of $400,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $383,793. The journal entry to record the first interest payment using the effective interest method of amortization is:

All of the following statements regarding uncertainty in liabilities are true except: