Intermediate Accounting 2- Exam 1 (Chapters 13, 14, and 15) questions and answers verified and updated.

Intermediate Accounting 2- Exam 1 (Chapters 13, 14, and 15) questions and answers verified and updated. $1,600,000 - correct answers.Parton owes $2 million that is due on February 28. The company borrows $1,600,000 on February 25 (5-year note) and uses the proceeds to pay down the $2 million note and uses other cash to pay the balance. How much of the $2 million note is classified as long-term in the December 31 financial statements. -$1,600,000 -$0 -$400,000 -$2,000,000 Obligation must be due with one year - correct answers.Which of the following is not a condition necessary to exclude a short-term obligation from current liabilities? Vested rights are not contingent upon an employee's future service - correct answers.In accounting for compensated absences, the difference between vested rights and accumulated rights is that: When the future events are probable to occur and the amount can be reasonably estimated - correct answers.When is a contingent liability recorded? State unemployment taxes - correct answers.Which of the following taxes does not represent a common employee payroll deduction? Debit Natural Gas Facility for $8,000,000 and credit Asset Retirement Obligation for $8,000,000 - correct answers.Xtra Processes is involved with innovative approaches to finding energy reserves. Xtra recently built a facility to extract natural gas at a cost of $15 million. However, Xtra is also legally responsible to remove the facility at the end of its useful life in twenty years. This cost is estimated to be $21 million (the present value of which is $8 million). What is the journal entry required to record the asset retirement obligation? Present values are used to measure certain liabilities - correct answers.What is the relationship between present value and the concept of a liability? Current Liabilities - correct answers.Among the short-term obligations of Larsen Company as of December 31, the balance sheet date, are notes payable totaling $250,000 with the Dennison National Bank. These are 90-day notes, renewable for another 90-day period. These notes should be classified on the balance sheet of Larsen company as $148,000 - correct answers.During 2013, Salton Co. introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 1% of sales in the year of sale, 3% in the year after sales, and 4% in the second year after sale. Sales and actual warranty expenditures for the first three-year period were as follows: (assume the accrual method) Should be reported as part current and part long-term - correct answers.Assume that a manufacturing corporation has (1) good quality control, (2) a one-year operating cycle, (3) a relatively stable pattern of annual sales, and (4) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs. Any liability for the warranty $16,450 - correct answers.Posner Co. is a retail store operating in a state with a 7% retail sales tax. The retailer may keep 2% of the sales tax collected. Posner Co. records the sales tax in the Sales Revenue account. The amount recorded in the Sales Revenue account during May was $251,450. Inventory - correct answers.Each of the following are included in both the current ratio and the acid-test ratio except Balance sheet as an item of stockholders' equity - correct answers.Stock dividends distributable should be classified on the 7.53% - correct answers.The effective interest on a 12-month, zero-interest-bearing note payable of $300,000, discounted at the bank at 7% is All of these. (Employee rights vest or accumulate, payment is probable, and amount can be reasonably estimated) - correct answers.Which of the following gives rise to the requirement to accrue a liability for the cost of compensated absences? The cause for action occurred during the accounting period covered by the financial statements - correct answers.Darren Company becomes aware of a lawsuit after the date of the financial statements, but before they are issued. A loss and related liability should be reported in the financial statements if the amount can be reasonably estimated, an unfavorable outcome is highly probable, and None of these - correct answers.Which of the following is a current liability? $7,600 - correct answers.Roasten Corp.'s payroll for the pay period ended October 31, 2014 is summarized as follows: Assume the following payroll tax rates: F.I.C.A. for employer and employee 7% each Unemployment 3% What amount should Roasten accrue as its share of payroll taxes in its October 31, 2014 balance sheet? All of these. (Deposits received from customers, withheld income taxes, and deferred revenue) - correct answers.Which of the following may be a current liability? $300,000; $140,000 - correct answers.A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2014. Historically, 10% of customers mail in the rebate form. During 2014, 3,000,000 packages of light bulbs are sold, and 160,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2014 financial statements dated December 31? $290,000 - correct answers.Ebbert Company's salaried employees are paid biweekly. Occasionally, advances made to employees are paid back by payroll deductions. Information relating to salaries for the calendar year 2015 is as follows: At December 31, 2015, what amount should Ebbert report for accrued salaries payable? Unrealized holding gain/loss-income - correct answers.If a company chooses the fair value option, a decrease in the fair value of the liability is recorded by crediting $19,663,522 - correct answers.A company issues $20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2013. Interest is paid on June 30 and December 31. The proceeds from the bonds are $19,604,144. Using straight-line amortization, what is the carrying value of the bonds on December 31, 2015? A deduction from bonds payable issued to arrive at net bonds payable and outstanding - correct answers.Treasury bonds should be shown on the balance sheet as $4,175,047 - correct answers.Downing Company issues $4,000,000, 6%, 5-year bonds dated January 1, 2014 on January 1, 2014. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?