Lyman Company Case Study

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Register to read the introduction… purchased to hold to maturity, 200 of the $1,000 face value, 9% bonds for $208,000. An additional $6,000 was paid for accrued interest. Interest is paid semiannually on December 1 and June 1 and the bonds mature on December 1, 2011. Lyman uses straight-line amortization. Ignoring income taxes, what was the amount reported in Lyman's 2007 income statement from this investment? | A. $4,020 | | B. $4,980 | | C. $4,500 | | D. $5,460 | | | | 27) On October 1, 2007, Porter Co. purchased to hold to maturity 1,000 of the $1,000 face value, 9% bonds for $990,000 which includes $15,000 accrued interest. The bonds, which mature on February 1, 2016, pay interest semiannually on February 1 and August 1. Porter uses the straight-line method of amortization. The bonds should be reported in the December 31, 2007 balance sheet at a carrying what value? | A. $975,750 | | B. $990,000 | | C. $975,000 | | D. $990,250 | | | | 28) Although only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that | A. at the end of the lease the property usually can be purchased by the lessee. …show more content…
an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the benefits promised. | | C. the expense recognized each period is equal to the cash contribution. | | D. the liability is determined based upon known variables that reflect future salary levels promised to employees. | | | | 39) The interest on the projected benefit obligation component of pension expense | A. reflects the rates at which pension benefits could be effectively settled. | | B. reflects the incremental borrowing rate of the employer. | | C. is the same as the expected return on plan assets. | | D. may be stated implicitly or explicitly when reported. | |

40) Windsor Company has outstanding both common stock and nonparticipating, noncumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by | A. the declaration of a stock dividend on common stock payable in common stock when the market price of the common is equal to its par value. | | B. a 2-for-1 split of the common stock. | | C. the declaration of a stock dividend on preferred payable in preferred stock when the market price of the preferred is equal to its par value.
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the payment of a previously declared cash dividend on the common stock. | | | | 41) Dividends are not paid on | A. nonparticipating preferred stock. | | B. Dividends are paid on all of these. | | C. noncumulative preferred stock. | | D. treasury common stock. | | | | 42) Assume common stock is the only class of stock outstanding in the B-Bar-B Corporation. Total stockholders' equity divided by the number of common stock shares outstanding is called | A. par value per share. | | B. market value per share. | | C. book value per share. | | D. stated value per share. | |

43) Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the | A. relevance characteristic. | | B. neutrality characteristic. | | C. economic entity assumption.

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