Solutions Manual for Intermediate Accounting.

Solutions Manual for Intermediate Accounting (Volume 2) 5th Canadian Edition By Kin Lo, George Fisher (All Chapters, 100% Original Verified, A+ Grade For a liability to exist, - ✔✔ANSWER✔✔a past transaction or event must have occurred. Kenwood Co. neglected to amortize the premium on outstanding ten -year bonds payable. What is the effect of the failure to record premium amortization on interest expense and bond carrying value, respectively? - ✔✔ANSWER✔✔Overstate; overstate Bond discount should be presented in the financial statements of the issuer as a(n) - ✔✔ANSWER✔✔contra liability Any gains or losses from the early extinguishment of debt should be - ✔✔ANSWER✔✔recognized in income of the period of extinguishment. For a bond issue that sells for more than its face value, the market rate of interest is - ✔✔ANSWER✔✔less than the rate stated on the bond. When interest expense is calculated using the effective -interest amortization method, interest expense (assuming that interest is paid annually) always equals the - ✔✔ANSWER✔✔carrying value of the bonds multiplied by the effective interest rate. Internal users of accounting information - ✔✔ANSWER✔✔... external users of accounting information - ✔✔ANSWER✔✔Investors, creditors, employees, labor unions, customers, suppliers, government regulatory agencies, financial intermediaries financial accounting - ✔✔ANSWER✔✔Provides relevant financial information to various external users. managerial accounting - ✔✔ANSWER✔✔deals with the concepts and methods used to provide information to an organization's internal users GAAP - ✔✔ANSWER✔✔set of both broad and specific guidelines that companies should follow when measuring and reporting the information in their financial statements and related notes SEC - ✔✔ANSWER✔✔responsible for setting accounting and reporting standards for companies whose securities are publicly traded FASB - ✔✔ANSWER✔✔the current private sector body that has been delegated the task of setting accounting standards. IASB - ✔✔ANSWER✔✔objectives are to develop a single set of high -quality understandable global accounting standards, to promote the use of those standards, and to bring about the convergence of national accounting standards and international accounting standards IFRS - ✔✔ANSWER✔✔developed by the IASB and used by more than 100 countries SOX - ✔✔ANSWER✔✔law provides for the regulation of the key players in the financial reporting process Initial market transactions - ✔✔ANSWER✔✔involves issuance of stocks and bonds by the corporation Secondary market transactions - ✔✔ANSWER✔✔involves the transfer of stocks and bonds between individuals and institutions Maltec Corporation has started placing its quarterly financial statements on its web page, thereby reducing by 10 days the time to get information to investors and creditors. The qualitative concept improved is: - ✔✔ANSWER✔✔Timeliness Timeliness - ✔✔ANSWER✔✔information that is available to users early enough to allow its use in the decision process Consistency - ✔✔ANSWER✔✔permits valid comparisons between different periods Faithful representation - ✔✔ANSWER✔✔exists when there is agreement between a measure or description and the phenomenon it purports to represent Comparability - ✔✔ANSWER✔✔the ability to help users see similarities and differences among events and conditions Astro Turf Company recognizes an expense, cost of goods sold, in the period the product is manufactured. - ✔✔ANSWER✔✔The matching principle Cloud Drug Company owns a patent that it purchased three years ago for $2 million. The controller recently revalued the patent to its approximate market value of $8 million. - ✔✔ANSWER✔✔The historical cost (original transaction value) principle Philips Company pays the monthly mortgage on the home of its president, Larry Crosswhite, and charges the expenditure to miscellaneous expense. - ✔✔ANSWER✔✔The economic entity assumption The economic entity assumption - ✔✔ANSWER✔✔of an entity be kept separated from activities of its owner The matching principle - ✔✔ANSWER✔✔expenses are recognized in the same period as the related revenues The historical cost principle - ✔✔ANSWER✔✔original transaction value Liability - ✔✔ANSWER✔✔Obligation to transfer cash or other resources as a result of a past transaction.