INTERMEDIATE ACCT VOL.2>CUSTOM<
9th Edition
ISBN: 9781307165067
Author: SPICELAND
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 13, Problem 13.13Q
Long-term obligations usually are reclassified and reported as current liabilities when they become payable within the upcoming year (or operating cycle, if longer than a year). So, a 25-year bond issue is reported as a long-term liability for 24 years but normally is reported as a current liability on the balance sheet prepared during the 25th year of its term to maturity. Name a situation in which this would not be the case.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following is a current liability?
Bond payable due in two years for which there is an adequate sinking fund.
Bond payable due in three years expected to be refinanced.
Bond payable due in eleven months for which there is an appropriation of retained earnings.
Bond payable due in eight months and refinanced on a long-term basis at the end of reporting period.
Define current liabilities and long-term liabilities. Underwhat circumstances might a 10-year bond issue be classifiedas a current liability? Under what circumstances might anote payable maturing 30 days after the balance sheet datebe classified as a long-term liability?
Presented below are two different situations related to Mckee Corporation’s debt obligations. Mckee’s next financial reporting date is December 31, 2020. The financial statements are authorized for issuance on March 1, 2021.
1. Mckee has a long-term obligation of $400,000, which is maturing over 4 years in the amount of $100,000 per year. The obligation is dated November 1, 2020, and the first maturity date is November 1, 2021.
2. Mckee has a short-term obligation due February 15, 2021. Its lender agrees to extend the maturity date of this loan to February 15, 2023. The agreement for extension is signed on January 15, 2021.
Instructions
Indicate how each of these debt obligations is reported on Mckee’s statement of financial position on December 31, 2020.
Chapter 13 Solutions
INTERMEDIATE ACCT VOL.2>CUSTOM<
Ch. 13 - What are the essential characteristics of...Ch. 13 - Prob. 13.2QCh. 13 - Bronson Distributors owes a supplier 100,000 on...Ch. 13 - Bank loans often are arranged under existing lines...Ch. 13 - Prob. 13.5QCh. 13 - Prob. 13.6QCh. 13 - Salaries of 5,000 have been earned by employees by...Ch. 13 - Prob. 13.8QCh. 13 - Prob. 13.9QCh. 13 - Prob. 13.10Q
Ch. 13 - Prob. 13.11QCh. 13 - Prob. 13.12QCh. 13 - Long-term obligations usually are reclassified and...Ch. 13 - How do IFRS and U.S. GAAP differ with respect to...Ch. 13 - Prob. 13.15QCh. 13 - Prob. 13.16QCh. 13 - Prob. 13.17QCh. 13 - Prob. 13.18QCh. 13 - Suppose the analysis of a loss contingency...Ch. 13 - Prob. 13.20QCh. 13 - Distinguish between the accounting treatment of a...Ch. 13 - At December 31, the end of the reporting period,...Ch. 13 - After the end of the reporting period, a...Ch. 13 - Prob. 13.24QCh. 13 - Prob. 13.25QCh. 13 - Prob. 13.26QCh. 13 - Prob. 13.27QCh. 13 - Prob. 13.28QCh. 13 - Bank loan; accrued interest LO132 On October 1,...Ch. 13 - Non-interest-bearing note; accrued interest LO132...Ch. 13 - Determining accrued interest LO132 On July1,...Ch. 13 - Commercial paper LO132 Branch Corporation issued...Ch. 13 - Non-interest-bearing note; effective interest rate...Ch. 13 - Prob. 13.6BECh. 13 - Advance collection LO133 In Lizzie Shoes...Ch. 13 - Sales tax LO133 DuringDecember, Rainey Equipment...Ch. 13 - Classifying debt LO134 Consider the following...Ch. 13 - Prob. 13.10BECh. 13 - Prob. 13.11BECh. 13 - Prob. 13.12BECh. 13 - Prob. 13.13BECh. 13 - Contingency LO135, LO136 Skill Hardware is the...Ch. 13 - Contingency LO135, LO136 Bell International can...Ch. 13 - Prob. 13.16BECh. 13 - Prob. 13.17BECh. 13 - Unasserted assessment LO135, LO136 At March 13,...Ch. 13 - Bank loan; accrued interest LO132 On November 1,...Ch. 13 - Determining accrued interest in various situations...Ch. 13 - Short-term notes LO132 The following selected...Ch. 13 - Paid future absences LO133 JWS Transport Companys...Ch. 13 - Paid future absences LO133 On January 1, 2018,...Ch. 13 - Prob. 13.6ECh. 13 - Customer deposits LO133 Diversified...Ch. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - FASB codification research LO133, LO134, LO135...Ch. 13 - Current noncurrent classification of debt; Sprint...Ch. 13 - Prob. 13.12ECh. 13 - Current noncurrent classification of debt LO131,...Ch. 13 - Prob. 13.14ECh. 13 - Warranties LO135, LO136 Cupola Awning Corporation...Ch. 13 - Extended warranties LO135, LO136 Carnes...Ch. 13 - Prob. 13.17ECh. 13 - Impairment of accounts receivable LO135, LO136...Ch. 13 - Prob. 13.19ECh. 13 - Various transactions involving contingencies ...Ch. 13 - Prob. 13.21ECh. 13 - Prob. 13.22ECh. 13 - Disclosures of liabilities Indicate (by letter)...Ch. 13 - Warranty expense; change in estimate LO135, LO136...Ch. 13 - Change in accounting estimate LO133 The...Ch. 13 - Contingency; Dow Chemical Company disclosure ...Ch. 13 - Payroll-related liabilities Appendix Lee...Ch. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Current noncurrent classification of debt LO131,...Ch. 13 - Various liabilities LO131 through LO134 The...Ch. 13 - Bonus compensation; algebra LO133 Sometimes...Ch. 13 - Various contingencies LO135, LO136 Eastern...Ch. 13 - Prob. 13.7PCh. 13 - Expected cash flow approach; product recall LO136...Ch. 13 - Subsequent events LO136 Lincoln Chemicals became...Ch. 13 - Subsequent events; classification of debt; loss...Ch. 13 - Prob. 13.11PCh. 13 - Various liabilities; balance sheet classification;...Ch. 13 - Payroll-related liabilities Appendix Alamar...Ch. 13 - Prob. 13.1BYPCh. 13 - Prob. 13.3BYPCh. 13 - Prob. 13.4BYPCh. 13 - Prob. 13.5BYPCh. 13 - Prob. 13.7BYPCh. 13 - Prob. 13.8BYPCh. 13 - Judgment Case 139 Loss contingency and full...Ch. 13 - Prob. 13.10BYPCh. 13 - Prob. 13.12BYPCh. 13 - Prob. 13.13BYPCh. 13 - Prob. 13.14BYPCh. 13 - Prob. 13.15BYPCh. 13 - Prob. 13.16BYPCh. 13 - Prob. 13.18BYPCh. 13 - Real World Case 1319 Contingencies LO135 Real...Ch. 13 - Real World Case 1320 Contingencies and Subsequent...Ch. 13 - Prob. 1CCTCCh. 13 - Prob. 1CCIFRS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- At the beginning of 2020, Leira Corporation issued 10% bonds with a face value of P 1,500,000. These bonds mature in the five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for P 1,389,600 to yield 12%. Waley uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2021? (Round your answer to the nearest dollar.) a. P 172,081b. P 167,255c. P 166,750d. P 169,387arrow_forwardAll payables that require payments at a future determinable date are subject to present value techniques except which of the following specifically excluded types? Security deposits or progress payments under construction contracts Short-term debt refinanced in the current year on a long-term basis Regular accounts payable due after one year Bond interest and principal payments due after one yeararrow_forwardOn January 1, Twilight Manufacturing issued $325,000 of 6%, 3-year bonds when the market rate of interest was 10%. The bonds pay interest semiannually on June 30 and December 31. A. How much are the proceeds that Twilight will receive on the issue date of the bonds? B. Prepare an amortization table for the bond issue.C. If the bonds are retired at the end of Year 2 at 104.5% of the maturity value, how much gain or loss on retirement will be reported?arrow_forward
- The following amortization and interest schedule reflects the issuance of 10 year bonds by CMA Corporation on January 1, 2019, and the subsequent interest payment and charges. The Company’s year end is December 31, and the financial statements are prepared once yearly. Instructions:(a) Indicate whether the bonds were issued at a premium or discount and how you can determine this fact from the schedule.(b) Indicate whether the amortization schedule is based on the straight line method or the effective interest method and how you can determine which method is used.(c) Determine the stated interest rate and the effective interest rate.(d) On the basis of schedule above, prepare the journal entry to record the issuance of bonds on January 1, 2019(e) On the basis of the schedule above, prepare the journal entry or entries to reflect the bond transactions and accruals for 2019. (Interest is paid January 1)(f) On the basis of the schedule above, prepare the journal entry or entries to…arrow_forwardJamison Company has the following obligations at December 31:For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.) 1. (a) A note payable for $100,000 due in 2 years. Not a current liabilityCurrent liability (b) A 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments. Not a current liabilityCurrent liability (c) Interest payable of $15,000 on the mortgage. Current liabilityNot a current liability (d) Accounts payable of $60,000.arrow_forwardOn January 1, 2021, a company issued 10-year, $3,000,000, 6% bonds with semiannual interest payments. The market interest rate for these bonds is 7%.Required:(a) Calculate the issue price of the bonds and determine whether the bonds issued at face amount, at a discount, or at a premium. Also, (b) complete the amortization schedule for the first four semiannual interest payments, (c) record the issuance of the bonds, and record the (d) first semiannual interest payment and (e) second semiannual interest payment. How would your answers change if the bonds had an 8% stated interest rate?arrow_forward
- Presented below are two different situations related to Mckee Corporation’s debt obligations. Mckee’s next financial reporting date is December 31, 2017. The financial statements are authorized for issuance on March 1,2018.1. Mckee has a long-term obligation of $400,000, which is maturing over 4 years in the amount of $100,000 per year. The obligation is dated November 1, 2017, and the first maturity date is November 1, 2018.2. Mckee has a short-term obligation due February 15, 2018. Its lender agrees to extend the maturity date of this loan to February 15, 2020. The agreement for extension is signed on January 15, 2018.InstructionsIndicate how each of these debt obligations is reported on Mckee’s statement of financial position on December 31, 2017.arrow_forwardA bond issued by Ford on May 15, 1997 is scheduled to mature on May 15, 2097. If today is November 16, 2007, what is this bond’s time to maturity? (Use 365 days a year.) time to maturity _________________ years and _______________ monthsarrow_forwardAt the beginning of 2020, Sheridan Company issued 8% bonds with a face value of $3400000. These bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $3149760 to yield 10%. Sheridan uses a calendar-year reporting period. Using the effective-interest method of amortization, what amount of interest expense should be reported for 2020? (Round your answer to the nearest dollar.) $314704 $316050 $313372 $328918arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Current assets and current liabilities; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Jw4TaiP42P4;License: Standard youtube license