Acet 2301 Exam 3 (Ch 7,8,9) version 2 Make sure you answer ALL 32 questions? Ans

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Acet 2301 Exam 3 (Ch 7,8,9) version 2 Make sure you answer ALL 32 questions? Answer on scantron True/False: Choose A" if the statement is True and - if the statement is False. (3 pts ea) . The legal life of a patent is the life of inventor plus 70 2 Unsecured bonds are not backed by a specific asset We use the term eapitalize to describe recording an expenditure as an expense ty when the likelihood of the loss occurring is reasonably probable and the We record a contingent liabili amount can be reasonably estimated 4. 5. For bonds issued at a discount the market interest rate is greater than the stated interest rate Multiple Choice: Choose the one alternative that best completes the statement or answers the question (3 pts ea) Answer MC #6-29 on your scantron 6. Proctor Manufacturing purchased land, a building, and equipment with fair values (market value) of the of S100,000, $700,000, and $200,000, respectively. Proctor paid a total of $800,000 for the land, building and equipment. At what amount would the company record the building on its books? A. $80,000. $560,000 C. S700,000 D. $800,000. 7. The price of a bond is equal to: A. The future value of the face amount only. B. The present value of the interest only C. The present value of the face amount plus the present value of the stated interest payments. D. The future value of the face amount plus the future value of the stated interest payments.

Explanation / Answer

1 . False(B) - Legal life of pantent can be maximum 20 years

2 . True (A)

3. False(B) - Capitalized term is used for recording an expenditure as asset

4. False(B) - We rocord PROVISION when reasonably probable and amoint is certain

5. True (A)

6.(b) 800,000 x 700,000 / 1,000,000 = 560,000

7. (C) PV of Face value plus PV of interest payments

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