Scott Drilling Contractors Recently Issued a Corporate Bond on Which

question 154

Multiple Choice

Scott Drilling Contractors recently issued a corporate bond on which it expects to pay interest for the next twenty years. Scott would record this as a __________ on its balance sheet.

• A) declining balance asset
• B) retained earning
• C) long-term liability
• D) long-term expense

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Definitions:

Expected NPV

The anticipated net present value, which estimates the present value of future cash flows minus initial investments, accounting for risk and uncertainty.

Project

A scheduled collection of connected activities designed to be completed within a specific timeframe and under predetermined budget and restrictions.

Discount Rate

The interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

Scrap Value

The estimated worth of a tangible asset at the end of its useful life, often related to material goods that can be recycled or sold for parts.