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ACCOUNTING CHAPTER 10 REPORTING AND INTERPRETING NON-CURRENT
LIABILITIES |2025-2026 LATEST UPDATED|REAL EXAM QUESTIONS AND
ANSWERS | 100% RATED CORRECT | 100% VERFIED SOLUTIONS | ALREADY
GRADED A+
Primo, Inc. issued $50,000, 5-year, 7% bonds that pay interest annually on January 1 when the
going market interest rate was 6%. The issue (sale) price of the bonds equals the ____.
a) present value of $50,000 plus the present value of an annuity of $3,500, both discounted at 7%
and 5 periods.
b) present value of $53,500 discounted at 7% and 5 periods.
c) present value of $50,000 plus the present value of an annuity of $3,500, both discounted at 6%
and 5 periods.
d) present value of $50,000 plus the present value of an annuity of $3,000, both discounted at 7%
and 5 periods. - (answer)c) present value of $50,000 plus the present value of an annuity of
$3,500, both discounted at 6% and 5 periods.
The two methods of amortizing bond discounts or premiums are called the ____ and the ____
methods.
a) straight-line
b) units-of-production
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c) matching
d) effective-interest
e) double-declining balance - (answer)a) straight-line, d) effective-interest
Primo, Inc. issued $50,000, 5-year, 7% bonds that pay interest annually on January 1 when the
going market interest rate was 6%. The issue (sale) price of the bonds equals the present value of
____ and 5 periods.
a) $50,000 plus the present value of an annuity of $3,000, both discounted at 7%
b) $53,500 discounted at 7%
c) $50,000 plus the present value of an annuity of $3,500, both discounted at 7%
d) $50,000 plus the present value of an annuity of $3,500, both discounted at 6% - (answer)d)
$50,000 plus the present value of an annuity of $3,500, both discounted at 6%
The difference between the interest rate on debt instruments and the risk-free rate is called the
____. - (answer)spread
ABC Company received $9,500 for its 5-year, 10% bonds with a total face value of $10,000. The
bonds pay interest annually on December 31. Using the straight-line method and assuming no
ACCOUNTING CHAPTER 10 REPORTING AND INTERPRETING NON-CURRENT
LIABILITIES |2025-2026 LATEST UPDATED|REAL EXAM QUESTIONS AND
ANSWERS | 100% RATED CORRECT | 100% VERFIED SOLUTIONS | ALREADY
GRADED A+
Primo, Inc. issued $50,000, 5-year, 7% bonds that pay interest annually on January 1 when the
going market interest rate was 6%. The issue (sale) price of the bonds equals the ____.
a) present value of $50,000 plus the present value of an annuity of $3,500, both discounted at 7%
and 5 periods.
b) present value of $53,500 discounted at 7% and 5 periods.
c) present value of $50,000 plus the present value of an annuity of $3,500, both discounted at 6%
and 5 periods.
d) present value of $50,000 plus the present value of an annuity of $3,000, both discounted at 7%
and 5 periods. - (answer)c) present value of $50,000 plus the present value of an annuity of
$3,500, both discounted at 6% and 5 periods.
The two methods of amortizing bond discounts or premiums are called the ____ and the ____
methods.
a) straight-line
b) units-of-production
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c) matching
d) effective-interest
e) double-declining balance - (answer)a) straight-line, d) effective-interest
Primo, Inc. issued $50,000, 5-year, 7% bonds that pay interest annually on January 1 when the
going market interest rate was 6%. The issue (sale) price of the bonds equals the present value of
____ and 5 periods.
a) $50,000 plus the present value of an annuity of $3,000, both discounted at 7%
b) $53,500 discounted at 7%
c) $50,000 plus the present value of an annuity of $3,500, both discounted at 7%
d) $50,000 plus the present value of an annuity of $3,500, both discounted at 6% - (answer)d)
$50,000 plus the present value of an annuity of $3,500, both discounted at 6%
The difference between the interest rate on debt instruments and the risk-free rate is called the
____. - (answer)spread
ABC Company received $9,500 for its 5-year, 10% bonds with a total face value of $10,000. The
bonds pay interest annually on December 31. Using the straight-line method and assuming no
