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Test bank For Intermediate Accounting: Chapter 6 (11th Edition by David Spiceland)
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Test bank For Intermediate Accounting: Chapter 6 (11th Edition by David Spiceland)
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Test bank For Intermediate Accounting:Chapter 6 (11th Edition by David
Spiceland)
Time value of money - ANSTime value of money - The relationship between time and money. A
dollar received today is worth more than a dollar promised at some time in the future because of
the opportunity to invest today's dollar and receive interest on the investment.
PRESENT VALUE-BASED ACCOUNTING MEASUREMENTS - ANS1. Notes. Valuing
noncurrent receivables and payables that carry no stated interest rate or a lower than market
interest rate.
2. Leases. Valuing assets and obligations to be capitalized under long-term leases and
measuring the amount of the lease payments and annual leasehold amortization.
3. Pensions and Other Postretirement Benefits. Measuring service cost components of
employers' postretirement benefits expense and postretirement benefits obligation.
4. Long-term Assets. Evaluating alternative long-term investments by discounting future cash
flows. Determining the value of assets acquired under deferred payment contracts. Measuring
impairments of assets.
5. Stock-based Compensation. Determining the fair value of employee services in
compensatory stock-option plans.
6. Business Combinations. Determining the value of receivables, payables, liabilities, accruals,
and commitments acquired or assumed in a "purchase."
7. Disclosures. Measuring the value of future cash flows from oil and gas reserves for disclosure
in supplementary information.
8. Environmental Liabilities. Determining the fair value of future obligations for asset retirements.
Interest - ANSInterest - Payment for the use of someone else's money. It is the excess cash
received/repaid over and above the amount lent/borrowed.
Principa - ANSPrincipal - The amount borrowed or invested.
Simple Interest - ANSSimple interest - Interest on principal only, regardless of interest that may
have accrued in past periods (compounded).
Compound Interest - ANScompound interest - Interest that accrues on both the principal and the
interest earned in past periods (interest not withdrawn or paid out).
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