Partial Balance Sheet, Ratios and Loss Contingency

See attached file for Problem 10.7.

The following items were taken from accounting records of Minnesota Satellite telephone corporation (MinnSat) for the year ended December 31, 2009 (dollar amounts are in thousands):


Accounts payable $65,600
Accrued expenses payable (other than interest) 11,347
6 3/4% Bonds payable, due February 1, 2010 100,000
8 1/2% Bonds payable, due June 1, 2010 250,000
Discount on bonds payable (8 1/2% bonds of 2010) 260
11% Bonds payable, due June 1, 2019 300,000
Premium on bonds payable (11% bonds of 2017) 1,700
Accrued interest payable 7,333
Bond interest payable 61,000
Other interest payable 17,000
Notes payable (short-term) 110,000
Lease payment obligations-capital leases 23,600
Pension obligation 410,000
Unfunded obligation-postretirement benefits 72,000
other than pensions
Deferred income taxes 130,000
Income taxes expense 66,900
Income taxes payable 17,300
Operating income 280,800
Net income 134,700
Total assets 2,093,500

Additional information:
1. Refinance of 6 3/4% bonds accomplished through issuance of
9% 20 year general debentures $150,000
2. Bonds due 6/1/08 will be repaid from bond sinking fund
3. Total lease payments due in 2010 14,400
Portion applicable to operating leases 7,479
Portion applicable to capital leases 6,921
Interest expense portion of capital lease payments 2,300
Capital lease payment reduction portion of 4,621
capital lease payments
4. Pension plan is fully funded with independent trustee
5. Portion of retired worker health insurance obligation 18,000
to be funded during 2010
6. 2009 income taxes payable must be paid 3/15/10 17,300

Other information

1. The 6¾% percent bonds due in February 2010 will be refinanced in January 2010 through the issuance of $150,000 in 9 percent, 20-year bonds payable.

2. The 8½% percent bonds due June 1, 2010, will be repaid entirely from a bond sinking fund.

3. MinnSat is committed to total lease payments of $14,000 in 2010. Of this amount, $7,479 is applicable to operating leases, and $6,921 to capital lease. Payments on capital leases will be applied as follows: $2,300 to interest expense and $4,621 to reduction in the capitalized lease payment obligation.

4. MinnSat’s pension plan is fully funded with an independent trustee.

5. The obligation for the postretirement benefits other than pensions consists of a commitment to maintain health insurance for retired workers. During 2010, MinnSat will fund $18,000 of this obligation.

6. The $17,300 in income tax payable relates to income taxes levied in 2009 and must be paid on or before March 15, 2010. No portion of the deferred tax liability is regarded as a current liability.


a. Using this information, prepare the current liabilities and long term liabilities sections of a classified balance sheet as of December 31, 2009. (Within each classification, items may be listed in any order.)

b. Explain briefly how the information in each of the six numbered paragraphs affected your presentation of the company’s liabilities.

c. Compute as of December 31, 2009, the company’s (1) debt ratio and (2) interest coverage ratio.

d. Solely on the basis of information state in this problem, indicate whether this company appears to be an outstanding, medium, or poor long term credit risk. State specific reasons for your conclusion.

Total liabilities (part a) = $1,088,620

10.7 Excel File attachment below


Case 10.3

Discuss each of the following situations, indicating whether the situation is a loss contingency that should be recorded or disclosed in the financial statements of Aztec Airlines. If the situation is not a loss contingency, explain how (if at all) it should be reported in the company’s financial statements (Assume that all dollar amounts are material.)

a. 1. Aztec estimates that $700,000 of its accounts receivables will prove to be uncollectable.

2. The company’s president is in poor health and has previously suffered two heart attacks.

3. As with any airline, Aztec faces the risk that a future airplane crash could cause considerable loss.

4. Aztec is being sued for $10 million for failing to adequately provide for passengers whose reservations were canceled as a result of the airline overbooking certain flights. This suit will not be resolved for a year or more.

B. Make a general statement that summarizes management’s ethical responsibility regarding reporting loss contingencies in financial statements.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with AssignmentHelpWeb
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Excellent services will definitely come back
Customer 452441, September 23rd, 2022
The paper was EXCELLENT. Thank you
Customer 452449, September 23rd, 2022
Public Administration
Excellent timely work
Customer 452451, April 19th, 2023
excellent loved the services
Customer 452443, September 23rd, 2022
English 101
Very good job. I actually got an A
Customer 452443, September 25th, 2022
Job well done and completed in a timely fashioned!
Customer 452451, November 18th, 2022
Architecture, Building and Planning
The assignment was well written and the paper was delivered on time. I really enjoyed your services.
Customer 452441, September 23rd, 2022
Business Studies
Job well done. Finish paper faster than expected. Thank you!
Customer 452451, October 3rd, 2022
Thanks a lot the paper was excellent
Customer 452453, October 26th, 2022
Business Studies
Excellent service - thank you!
Customer 452469, February 20th, 2023
Business Studies
Thank you!
Customer 452451, November 27th, 2022
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat