Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Textbook Question
Chapter 6, Problem 5QE
Assume that a corporation needs to enter the private debt market to raise funds for plant expansion. The corporation expects debt covenants to place restrictions on the levels of its current ratio and total-liabilities-to-assets ratio. Considering the accounts that comprise these ratios, give examples of accounting estimates, accounting judgments, and structured transactions that the lender should examine closely.
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Students have asked these similar questions
Which of the following statements about the characteristics of debt and equity is true?
a.
All of the statements are true
b.
They can both be long-term financial instruments.
c.
They both involve a claim on the issuer's income.
d.
They both enable a corporation to raise funds.
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI?
Group of answer choices
All of these.
An entity may make an irrevocable election to classify investment in a debt instrument that is not ‘held for trading’ as such.
In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial assets are integral to meeting management’s objectives.
This classification is not allowed for investment in debt instruments.
Which of the following is correct regarding the classification of investment in debt instruments as financial asset at fair value through OCI?
A. All of these.
B. An entity may make an irrevocable election to classify investment in a debt instrument that is not held for trading' as such.
C. In order to be classified as such, a debt instrument needs to both have simple principal and interest cash flows and be held in a business model in which both holding and selling financial i assets are integral to meeting management's objectives.
D. This classification is not allowed for investment in debt instruments.
Chapter 6 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
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