How should an analyst most appropriately adjust the financial statements of a firm that uses operating leases to finance its plant and equipment?
A. Increase liabilities.
B. Decrease long-lived assets.
C. Decrease shareholders equity.
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Using the effective interest rate method, the reported interest expense of a bond issued at a premium will:
A. Decrease over the term of the bond.
B. Increase over the term of the bond.
C. Remain unchanged over the term of the bond.
A net pension asset or net pension liability is equal to the difference between the fair value of plan assets and the expected pension obligation under:
A. IFRS only.
B. U.S. GAAP only.
C. Both IFRS and U.S. GAAP.
Which of the following statements about indefinite-lived intangible assets is most accurate?
A. They are amortized on a straight-line basis over a period not to exceed 40 years.
B. They are reported on the balance sheet indefinitely.
C. They never appear on the balance sheet unless they are internally developed.
In the early years of an assets life, a firm using the double-declining balance method, as compared to a firm using straight-line depreciation, will report lower:
A. Depreciation expense.
B. Operating cash flow.
C. Retained earnings.