1- All of the following statements regarding accounting treatments for liabilities under U.S. GAAP and IFRS are true except:

Multiple Choice

Accounting for bonds and notes under U.S. GAAP and IFRS is similar.

Both U.S. GAAP and IFRS require companies to distinguish between operating leases and capital leases.

The criteria for identifying a lease as a capital lease are more general under IFRS.

Both U.S. GAAP and IFRS require companies to record costs of retirement benefits as employees work and earn them.

Use of the fair value option to account for bonds and notes is not acceptable under U.S. GAAP or IFRS.

2- A company issues 9%, 5-year bonds with a par value of $100,000 on January 1 at a price of $106,160, when the market rate of interest was 8%. The bonds pay interest semiannually. The amount of each semiannual interest payment is:

Multiple Choice

$9,000.

$8,000.

$4,000.

$4,500.

$0.

3- On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What is the journal entry to record the first annual payment?

Multiple Choice

Debit Cash $250,000; debit Interest Expense $37,258; credit Notes Payable $287,258.

Debit Interest Expense $37,258; credit Cash $37,258.

Debit Interest Expense $20,000; credit Cash $20,000.

Debit Interest Expense $20,000; debit Interest Payable $17,258; credit Cash $37,258.

Debit Interest Expense $20,000; debit Notes Payable $17,258; credit Cash $37,258.

4- A bondholder that owns a $1,000, 10%, 10-year bond has:

Multiple Choice

Ownership rights in the issuing company.

The right to receive $10 per year until maturity.

The right to receive $1,000 at maturity.

The right to receive $10,000 at maturity.

The right to receive dividends of $1,000 per year.