5. Which of the followingstatements is true in financeleases, from the viewpoint ofthe lessor regarding residualvalues? *a. Guaranteed residual values areincluded in the gross investmentO amount, but unguaranteed residualvalues are excluded from the grossinvestment.b. Guaranteed residual values areexcluded from the gross investmentamount, but unguaranteed residualvalues are included in the grossinvestment.c. Guaranteed and unguaranteedO residual values are both included inthe gross investment amount.d. Guaranteed and unguaranteedresidual values are both excludedfrom the gross investment amount

Residual value is the estimated fair value of the leased asset at the end of the lease, and can be…

Answered: 5. Which of the following statements is…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter6: Accounting Quality

Section: Chapter Questions

Problem 4QE

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Similar questions

Which statement is true? * General borrowings may earn investment income deductible against general borrowing cost Capitalizable general borrowing cost is the total interest of all general borrowing costs Capitalizable general borrowing cost is the actual interest of all general borrowings less any investment income None of the above
1. According to PFRS 9, The amortized cost of a financial instrument is calculated using. A. The effective interest method. B. The straight line method C. A or b D. Choice a however, the straight line method can be used in some circumstances. 2. The amortization of a discount on an investment in bonds measured at amortized cost A. Increases the carrying amount of the investment B. Is the excess of interest income over interest received or receivable. C. Is recorded directly to the invesment account D. All of these 3. Which of the following statements is correct for an investment in term bonds that was acquired at a premium? A. The amortized cost of the bonds increases annually. B. The current and non current portions of the bonds as of the reporting date are reported separately. C. The interest income recognized each year is higher than the amount of interest received/ receivable. D. The effective interest rate is lower than the stated rate of the bonds. 4. The rate…
The borrowing cost to be capitalized in general borrowing cost is the lower between the amount computed using the average expenditure multiplied by the capitalization rate and total interest of the borrowings TRUE OR FALSE
Josh Co did not amortize the discount on its short-term bond investment. What effect would this have of the carrying value of the investment and on net income, respectively? A. overstated, overstated B. understated, overstated C. understated, understated D. no effect, no effect
The interest rate at which the MARR is established depends principally upon the cost of capital and the mix between debt and equity ﬁnancing Select one: True False
Short-term debt should be excluded in the estimation of WACC if it is a permanent source of financing. A. True B. False C. Insufficient information
True (t) or False (f) _____ The accounting for short-term debt investments and for long-term debt investments is similar
The discount rate used in a net present value analysis is the ________. A. rate of interest earned on a savings account B. rate of inflation C. rate of interest charged for debt financing of an investment D. required rate of return or the hurdle rate
Is the relevant cost of debt, when calculating the WACC, theinterest rate on already outstanding debt or the rate on newdebt? Why?
Why is the after-tax cost of debt rather than the before-tax cost used to calculate the WACC?
4. Explain or illustrate before-tax cost of debt and after-tax cost of debt. 5. What are the relationships between: a) interest rate and cost of debt; b) default risk and cost of debt; and c) bond rates and interest rates? 6. What is the difference between yield to maturity on outstanding debt and coupon rate? Which is a better measure of cost of debt between the two? 7. How is COST OF preferred equity computed?
Buying assets that yield a return greater than the minimum acceptable hurdle rate is a part of which core principles of Finance. a. Financing principle b. Investment principle c. Dividend principle d. Cost principle

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