B. be written off by systematic charges as a regular operating expense over the period benefited. C. be written off as soon as possible as an extraordinary item. D. not be amortized. 42) The intangible asset goodwill may be A. capitalized only when purchased. B. capitalized only when created internally. C. capitalized either when purchased or created internally. D. written off directly to retained earnings. 43) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT A. a general description of the financing arrangement. B. the terms of any equity security issued or to be issued. C. the terms of the new obligation incurred or to be incurred. D. the number of financing institutions that refused to refinance the debt, if any. 44) Which of the following items is a current liability? A.Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months. B. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months. C. Bonds due in three years. D. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue. 45) Which of the following statements is false? A. A company may exclude a short-term obligation from current liabilities if the firm intends to refinance the obligation on a long-term basis and demonstrates an ability to complete the refinancing. B. Under the cash basis method, warranty costs are charged to expense as they are paid. C. Cash dividends should be recorded as a liability when they are declared by the board of directors. D. FICA taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority. 46) Simson Company has 35 employees who work 8-hour days and are paid hourly. On January 1, 2006 the company began a program of granting its employees 10 days of paid vacation each year. Vacation days earned in 2006 may first be taken on January 1, 2007. Information relative to these employees is as follows: Year Hourly Wages Vacation Days Earned by Each Employee Vacation Days Used by Each Employee 2006 $25.80 10 0 2007 27.00 10 8 2008 $28.50 10 10 What is the amount of expense relative to compensated absences that should be reported on Simson’s income statement for 2006? A. $0. B. $75,600. C. $68,880. D. $72,240.
47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During