Question

When an instrument is called before maturity, less OID will have been recognized at the time of call than would have been recognized had the actual term been the original term

true

false

Trade discounts are usually considered adjustments to the purchase price and are available to the purchaser without regard to the timeliness of payment

true

false

Megair Corp. manufactures two types of airplanes: small, general aviation planes that require approximately 6 months to finish & large jet aircrafts sold to airlines that require two years to complete. Megair maintains an inventory of the small planes but manufactures the large planes to contract specification. Megair must use the long-term contract accounting rules for both types of planes.

true

false

Answer 1

when an instrument is called before maturity, less OID will have been recognized at the time of call than would have been recognized had the actual term been the original term	TRUE	The original issue discount (OID) is the difference between the original face value amount and price paid for a bond.The price paid for a bond is lower than the face value.
Trade discounts are usually considered adjustments to the purchase price and are available to the purchaser without regard to the timeliness of payment	TRUE	a Trade discount is a discount  given by the seller to the buyer at the time of purchase of goods. It is given as a deduction in the list price or retail price of the quantity sold.
Megair Corp. manufactures two types of airplanes: small, general aviation planes that require approximately 6 months to finish & large jet aircrafts sold to airlines that require two years to complete. Megair maintains an inventory of the small planes but manufactures the large planes to contract specification. Megair must use the long-term contract accounting rules for both types of planes.	FALSE	Manufacturing contracts may qualify either if the item ordinarily takes longer than 1 year to manufacture or if the item is unique and manufactured for a particular customer on demand.