On July 1, 2017, Rectangle, Inc purchased Diamond Company's five-year 12% bonds with a face value of $500,000 for $569,000, which included $25,000 of accrued interest. The bonds, which mature on February 1, 2022, are to be held-to-maturity and pay interest on February 1 and August 1. Rectangle uses the straight-line method of amortization. The amount of income that Rectangle would report for the
calendar year 2017 as a result of this long-term investment would be
A) $20,400.
B) $25,200.
C) $30,000.
D) $34,800.
B
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An attorney receives a check from the defendant in settlement of a lawsuit brought by his client, the plaintiff. Even if the check is made out in the name of the attorney, it will belong to the client as a:
a. resulting trust. b. constructive trust. c. totten trust. d. spendthrift trust.
Fairline Skyways has a significant presence at the Charlotte International Airport and therefore operates the Diamond Club, which is across from gate 36 in terminal 1. The Diamond Club provides food and business services for the company's frequent flyers. Consider the following selected costs of Club operation:Receptionist and supervisory salaries Catering Terminal depreciation (based on square footage) Airport fees (computed as a percentage of club revenue) Allocated Fairline administrative overhead Management is exploring whether to close the club and expand the seating area for gate 36. Which of the preceding expenses would the airline classify as unavoidable?
A. 3, 5. B. 3. C. 5. D. 4. E. None of the answers is correct.
Tyler Incorporated receives $150,000 from investors in exchange for shares of its common stock. Tyler Incorporated records this transaction with a:
A. Debit to Investments. B. Credit to Service Revenue. C. Credit to Retained Earnings. D. Credit to Common Stock.
A security firm is offered $80,000 in one year for providing CCTV coverage of a property. The cost of providing this coverage to the security firm is $74,000, payable now, and the interest rate is 8.5%. Should the firm take the contract?
A) Yes, since net present value (NPV) is positive. B) It does not matter whether the contract is taken or not, since NPV = 0. C) Yes, since net present value (NPV) is negative. D) No, since net present value (NPV) is negative.