Assignment Task:

Exploring Liabilities, Bonds, and Financial Analysis

Questions:

1. Which of the following statements about liabilities is FALSE?

   a. A current liability is due within one year of the report date for the financial statements.

   b. Bonuses due to managers will be recorded as an accrued liability.

   c. If a loan from a bank for $5 million has equal payments of $1 million due in years 1, 2, 3, 4, and 5; record the $5 million as a long-term (noncurrent) liability.

   d. An example of deferred revenues is the payment for a one-year subscription to a magazine publisher.

2. Bond Basics: Match the statement on the left with the correct answer on the right.

   a. A bond with a face amount of $100 million and a coupon rate of 4% is issued for $102 million.

   b. The yield to maturity at issuance is 4.2%, and the coupon rate is 4.0%. The face amount is $100 million. How much would be paid to bondholders on an annual interest payment?

   c. The company issues a bond with a face amount of $100 million on January 2. On February 15, the bonds are trading at $102 million. What is the impact on the financial statements of the company in February?

   d. The company has $100 million face value bonds that were issued 4 years ago. There is a balance in the discount on bonds in the amount of -$1 million. If the company can buy all the bonds on the open market at $98 million, is there a gain or loss?

3. Which of the following statements is NOT TRUE about bonds?

4. The company wants to build a major new factory. A leasing company offers to finance $1 million of equipment in the factory, and the company would make monthly payments of $18,000 per month. Which of the following is FALSE?

5. Which of the following is TRUE about liabilities?

6. Match the comment on the left with the correct answer on the right.

7. Compute Earnings Per Share (EPS) and Diluted Earnings Per Share for a company with the following information.

8. Which statement about Accumulated Other Comprehensive Income is TRUE?

9. The firm`s goal is to _________________________.

10. When marginal revenue is GREATER THAN marginal cost, then it makes sense for the firms to _________.

11. One of the variables to determine how to maximize profit is the price charged to customers. In a perfectly competitive market, the ______________________.

12. Under the perfectly competitive market structure, the goods being sold by the individual firms are considered to be ________________________________.

13. Under the perfectly competitive market structure, individual firms have the incentive to invest in technology to gain an advantage over competitors.

14. According to the Coal India video, what is holding up the construction of a new railway line?

15. According to the film, Coal India has always been profitable.

16. A monopoly firm, acting like a lazy monopolist with no competition, has an absolute incentive to lower its production process costs and hence will invest in more technology.

17. A monopoly firm is different from a competitive firm in that ________________________________________.