Exam 8: Liability Recognition and Related Expenses

NOTE: These multiple choice questions require present value information. Rudolph Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Randolph's incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Rudolph and a portion of the company's operating lease footnote. Using the information provided by Rudolph Corporation calculate the company's 2008 fixed asset ratio.

NOTE: The following problem requires present value information. On January 1, 2006, Price Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for: Required:

Liabilities requiring the future delivery of goods or services appear on the balance sheet at the ______________________________ of those goods and services.

An agreement in which a purchaser agrees to pay specified amounts periodically to a seller for products or services is known as a ________________________________________.

Which of the following is not a condition that requires capital lease accounting?

Analysts concerns with postretirement benefits include all of the following except

Derivative instruments acquired to hedge exposure may be classified as either a fair value hedge or a cash flow hedge. Distinguish between the two types of hedges.

GAAP requires firms to report the assets and liabilities of defined benefit plans _______________________________________________________.

NOTE: The following multiple choice questions require present value information. On January 1, 2006, Price Corporation signed a five-year noncancelable lease for certain machinery. The terms of the lease called for: Under which of the following conditions does the equipment lease qualify for capital lease accounting?

Derivative instruments acquired to hedge exposure to variability in expected future cash are _________________________ hedges.

Under an operating lease agreement the lessee recognizes ______________________________ each period that the leased asset is used.

The _____________________________________________ is equal to the actuarial present value of amounts that the employer expects to pay to retired employees based on the employees' service to date and using expected future salary amounts.

Deferred tax liabilities result in future tax ____________________ when temporary differences reverse.

Which of the following is not normally recognized as a liability on the balance sheet?

Accountants use reserve accounts for various reasons, for each of the scenarios below describe a specific account example that matches the scenario.

Worldwide, Inc. provides consulting services globally. The company pays taxes to the nation where revenues are earned. Information about the company's taxes are presented below: Required:

Optical Networks Optical Networks is a leading semiconductor company with operations in 17 different countries. Information about the company's taxes appears below: Using the information provided by Optical Networks determine the federal effective tax rate for 2005.

Which of the following is not a distinguishing characteristic of a derivative instrument?

Which of the following best describes the accounting treatment for derivative instruments not held for purposes of hedging?

Listed below are 12 accounting liabilities, place each in one of the following six categories: In addition, determine which liabilities would be recognized on the balance sheet as liabilities and those that would not be recognized.