Wiggins Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $50,000; Year 2, $90,000; Year 3, $130,000. Below is some of the time value of money information that Wiggins has compiled that might help them in their planning and compounded interest decisions. \[\begin{array} { | l | r | r | r | } \hline & 1 \text { period, } 11 \% & 2 \text { periods, } 11 \% & 3 \text { periods, } 11 \% \\ \hline \text { Present value of 1 } & 0.90090 & 0.81162 & 0.73119 \\ \hline \text { Future value of 1 } & 1.11000 & 1.23210 & 1.36763 \\ \hline \text { Present value of an annuity of 1 } & 0.90090 & 1.71252 & 2.44371 \\ \hline \text { Future value of an annuity of 1 } & 1.00000 & 2.12000 & 3.37440 \\ \hline \end{array}\] Wiggins requires a minimum rate of return of 11%. To the closest dollar, what is the maximum price Wiggins should pay for the equipment?

A) $219,137 B) $213,146 C) $218,099 D) $208,499 A) $219,137 B) $213,146 C) $218,099 D) $208,499

Brenda Draper borrowed $120,000 on June 1, 2013. This amount plus accrued interest at 8% compounded annually is to be repaid on June 1, 2026. Brenda has obtained the following values related to the time value of money to help her with her financing process and compounded interest decisions. $\begin{array}{lr} \text { Present value of } 1 \text { for } 13 \text { periods at } 8 \% & 0.36770 \\ \text { Future value of } 1 \text { for } 13 \text { periods at } 8 \% & 2.71962 \\ \text { Present value of an annuity of } 1 \text { for } 13 \text { periods at } 8 \% & 7.90378 \\ \text { Future value of an annuity of } 1 \text { for } 13 \text { periods at } 8 \% & 21.49530 \end{array}$ To the closest dollar, how much will Brenda have to repay on June 1, 2026?

A) $44,124 B) $948,454 C) $261,554 D) $326,354 A) $44,124 B) $948,454 C) $261,554 D) $326,354

Exam 14: Understanding Investments and Acquisitions in Accounting

Wiggins Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $50,000; Year 2, $90,000; Year 3, $130,000. Below is some of the time value of money information that Wiggins has compiled that might help them in their planning and compounded interest decisions. 1 period, 11\% 2 periods, 11\% 3 periods, 11\% Present value of 1 0.90090 0.81162 0.73119 Future value of 1 1.11000 1.23210 1.36763 Present value of an annuity of 1 0.90090 1.71252 2.44371 Future value of an annuity of 1 1.00000 2.12000 3.37440 Wiggins requires a minimum rate of return of 11%. To the closest dollar, what is the maximum price Wiggins should pay for the equipment?

(Multiple Choice)

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Question 161

Tweetsie Railroad Co. is about to issue $800,000 of 10-year bonds paying a 9% interest rate, with interest payable semianually. The discount rate for such securities is 10%. How much can Tweetsie expect to receive for the sale of these bonds?

(Essay)

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Question 162

The amount you must deposit now in your savings account paying 5% interest, in order to accumulate $15,000 for your first tuition payment when you start college in 3 years is

(Multiple Choice)

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Question 163

Which of the following would not be reported under "Other Revenues and Gains" on the income statement?

(Multiple Choice)

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Question 164

Appalachian Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $50,000; Year 2, $60,000; Year 3, $75,000. Appalachian requires a minimum rate of return of 10%. What is the maximum price Appalachian should pay for this equipment?

(Essay)

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Question 165

A company that owns more than 50% of the common stock of another company is known as the __ company and _ financial statements are usually prepared.

(Short Answer)

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Question 166

Debt investments are investments in government and _____________ bonds.

(Short Answer)

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Question 167

Sauls Company is considering an investment that will return a lump sum of $1,250,000 six years from now. What amount should Sauls Company pay for this investment to earn a 12% return?

(Essay)

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Question 168

A stock investment classified as trading securities is purchased for $73,500. At year end, when the market value of the stock is $65,000, the adjusting entry includes a

(Multiple Choice)

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Question 169

A consolidated balance sheet reports the financial position of two or more legal entities just as if they were one reporting unit. Explain why all the individual items appearing on the separate balance sheets of each of the affiliated companies cannot be added together to arrive at a consolidated total for each item.

(Essay)

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Question 170

If the single amount of $12,500 is to be received in 2 years and discounted at 11%, its present value is

(Multiple Choice)

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Question 171

Which of the following would not be classified as a short-term investment?

(Multiple Choice)

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Question 172

If a parent company has two wholly owned subsidiaries, how many legal and economic entities are there from the viewpoint of the shareholders of the parent company? Legal Economic a. 3 3 b. 1 2 c. 3 1 d. 2 1

(Short Answer)

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Question 173

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor has _ influence over the investee and therefore, the appropriate method of accounting for this type of investment is the _ method.

(Short Answer)

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Question 174

Brenda Draper borrowed $120,000 on June 1, 2013. This amount plus accrued interest at 8% compounded annually is to be repaid on June 1, 2026. Brenda has obtained the following values related to the time value of money to help her with her financing process and compounded interest decisions. Present value of 1 for 13 periods at 8\% 0.36770 Future value of 1 for 13 periods at 8\% 2.71962 Present value of an annuity of 1 for 13 periods at 8\% 7.90378 Future value of an annuity of 1 for 13 periods at 8\% 21.49530 To the closest dollar, how much will Brenda have to repay on June 1, 2026?

(Multiple Choice)

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Question 175

If one company owns more than 50% of the common stock of another company

(Multiple Choice)

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Question 176

Which of the following is a debt security?

(Multiple Choice)

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Question 177

Assume that Chapman's Inc.'s trading securities have a total cost of $185,000 and a total fair value of $215,000 at year end. The related adjusting entry would include a debit to

(Multiple Choice)

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Question 178

Wando Company is considering investing in an annuity contract that will return $55,000 annually at the end of each year for 20 years. What amount should Wando Company pay for this investment if it earns a 6% return?

(Essay)

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Question 179

Assume that Oslo Corp. acquires 30% of Celdon Corp. for $300,000 on January 1, 2014. If Celdon declares and pays $100,000 in total dividends on February 14th, the journal entry would include a credit to

(Multiple Choice)

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Question 180

Showing 161 - 180 of 314

Tweetsie Railroad Co. is about to issue $800,000 of 10-year bonds paying a 9% interest rate, with interest payable semianually. The discount rate for such securities is 10%. How much can Tweetsie expect to receive for the sale of these bonds?

The amount you must deposit now in your savings account paying 5% interest, in order to accumulate $15,000 for your first tuition payment when you start college in 3 years is

Which of the following would not be reported under "Other Revenues and Gains" on the income statement?

Appalachian Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $50,000; Year 2, $60,000; Year 3, $75,000. Appalachian requires a minimum rate of return of 10%. What is the maximum price Appalachian should pay for this equipment?

A company that owns more than 50% of the common stock of another company is known as the __ company and _ financial statements are usually prepared.

Debt investments are investments in government and _____________ bonds.

Sauls Company is considering an investment that will return a lump sum of $1,250,000 six years from now. What amount should Sauls Company pay for this investment to earn a 12% return?

A stock investment classified as trading securities is purchased for $73,500. At year end, when the market value of the stock is $65,000, the adjusting entry includes a

If the single amount of $12,500 is to be received in 2 years and discounted at 11%, its present value is

Which of the following would not be classified as a short-term investment?

If a parent company has two wholly owned subsidiaries, how many legal and economic entities are there from the viewpoint of the shareholders of the parent company? Legal Economic a. 3 3 b. 1 2 c. 3 1 d. 2 1

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor has _ influence over the investee and therefore, the appropriate method of accounting for this type of investment is the _ method.

If one company owns more than 50% of the common stock of another company

Which of the following is a debt security?

Assume that Chapman's Inc.'s trading securities have a total cost of $185,000 and a total fair value of $215,000 at year end. The related adjusting entry would include a debit to

Wando Company is considering investing in an annuity contract that will return $55,000 annually at the end of each year for 20 years. What amount should Wando Company pay for this investment if it earns a 6% return?

Assume that Oslo Corp. acquires 30% of Celdon Corp. for $300,000 on January 1, 2014. If Celdon declares and pays $100,000 in total dividends on February 14th, the journal entry would include a credit to

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Filters

Exam 14: Understanding Investments and Acquisitions in Accounting

Tweetsie Railroad Co. is about to issue $800,000 of 10-year bonds paying a 9% interest rate, with interest payable semianually. The discount rate for such securities is 10%. How much can Tweetsie expect to receive for the sale of these bonds?

The amount you must deposit now in your savings account paying 5% interest, in order to accumulate $15,000 for your first tuition payment when you start college in 3 years is

Which of the following would not be reported under "Other Revenues and Gains" on the income statement?

Appalachian Company is considering purchasing equipment. The equipment will produce the following cash flows: Year 1, $50,000; Year 2, $60,000; Year 3, $75,000. Appalachian requires a minimum rate of return of 10%. What is the maximum price Appalachian should pay for this equipment?

A company that owns more than 50% of the common stock of another company is known as the ______________ company and _____________ financial statements are usually prepared.

Debt investments are investments in government and _____________ bonds.

Sauls Company is considering an investment that will return a lump sum of $1,250,000 six years from now. What amount should Sauls Company pay for this investment to earn a 12% return?

A stock investment classified as trading securities is purchased for $73,500. At year end, when the market value of the stock is $65,000, the adjusting entry includes a

If the single amount of $12,500 is to be received in 2 years and discounted at 11%, its present value is

Which of the following would not be classified as a short-term investment?

If a parent company has two wholly owned subsidiaries, how many legal and economic entities are there from the viewpoint of the shareholders of the parent company? Legal Economic a. 3 3 b. 1 2 c. 3 1 d. 2 1

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor has _______________ influence over the investee and therefore, the appropriate method of accounting for this type of investment is the _______________ method.

If one company owns more than 50% of the common stock of another company

Which of the following is a debt security?

Assume that Chapman's Inc.'s trading securities have a total cost of $185,000 and a total fair value of $215,000 at year end. The related adjusting entry would include a debit to

Wando Company is considering investing in an annuity contract that will return $55,000 annually at the end of each year for 20 years. What amount should Wando Company pay for this investment if it earns a 6% return?

Assume that Oslo Corp. acquires 30% of Celdon Corp. for $300,000 on January 1, 2014. If Celdon declares and pays $100,000 in total dividends on February 14th, the journal entry would include a credit to

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Filters

A company that owns more than 50% of the common stock of another company is known as the __ company and _ financial statements are usually prepared.

When an investor owns between 20% and 50% of the common stock of a corporation, it is generally presumed that the investor has _ influence over the investee and therefore, the appropriate method of accounting for this type of investment is the _ method.