Reference no: EM131115850
Refinancing of Short-Term Debt Dumars Corporation reports in the current liability section of its balance sheet at December 31, 2010 (its year-end), short-term obligations of $15,000,000, which includes the current portion of 12% long-term debt in the amount of $10,000,000 (matures in March 2011). Management has stated its intention to refinance the 12% debt whereby no portion of it will mature during 2011. The date of issuance of the financial statements is March 25, 2011.
(a) Is management's intent enough to support long-term classification of the obligation in this situation?
(b) Assume that Dumars Corporation issues $13,000,000 of 10-year debentures to the public in January 2011 and that management intends to use the proceeds to liquidate the $10,000,000 debt maturing in March 2011. Furthermore, assume that the debt maturing in March 2011 is paid from these proceeds prior to the issuance of the financial statements. Will this have any impact on the balance sheet classification at December 31, 2010? Explain your answer.
(c) Assume that Dumars Corporation issues common stock to the public in January and that management intends to entirely liquidate the $10,000,000 debt maturing in March 2011 with the proceeds of this equity securities issue. In light of these events, should the $10,000,000 debt maturing in March 2011 be included in current liabilities at December 31, 2010?
(d) Assume that Dumars Corporation, on February 15, 2011, entered into a financing agreement with a commercial bank that permits Dumars Corporation to borrow at any time through 2012 up to $15,000,000 at the bank's prime rate of interest. Borrowings under the financing agreement mature three years after the date of the loan. The agreement is not cancelable except for violation of a provision with which compliance is objectively determinable. No violation of any provision exists at the date of issuance of the financial statements. Assume further that the current portion of long-term debt does not mature until August 2011. In addition, management intends to refinance the $10,000,000 obligation under the terms of the financial agreement with the bank, which is expected to be financially capable of honoring the agreement.
(1) Given these facts, should the $10,000,000 be classified as current on the balance sheet at December 31, 2010?
(2) Is disclosure of the refinancing method required?
What is the breakeven level of sales in units
: Petsmart is thinking of developing a new line of goods made especially for people to hang out with their dogs and get a little exercise. What is the breakeven level of sales in units and dollars for the project
|
Which is not measured by the job descriptive index
: Three of the following are objectives of the unemployment insurance program. Which is not an objective of the unemployment insurance program? Why are growing numbers of employers opting for defined-contribution plans?
|
What type of information would you look for
: What type of information would you look for? Who else would you interview? How would you approach each of the different individuals? What factors will affect your approach? When would you suggest approaching James?
|
National aids behavioral surveys sample
: In the National AIDS Behavioral Surveys sample of 2673 adult heterosexuals, 0.2% (that's 0.002 as a proportion) had both received a blood transfusion and had a sexual partner from a group at high risk of AIDS. Explain why we can't use the large-sa..
|
Refinancing of short term debt dumars corporation reports
: Is management's intent enough to support long-term classification of the obligation in this situation?
|
Modern inventory management techniques
: Parts, materials and product inventories need to be kept up to date irrespective of their dynamic nature. As a fresh graduate from college document clearly the modern inventory management techniques.
|
Do you use drugs
: Do you use drugs - If you found a wallet with $100 in it on the street, would you do the honest thing and return it to the person or would you keep it?
|
Test for the defective component
: Two samples of 150 cars (sample A) and 250 cars (sample B) were taken to test for the defective component. Which of the following statements must be true:
|
How and why your article relates to concepts from our text
: Explain how and/or why your article relates to and/or illustrates concepts from our text. Tie your article in to AS MANY CONCEPTS FROM THE TEXT AS POSSIBLE.
|