Which economic events are relevant and objectively measurable?
- The company entered into a new contract with the employees” union that calls for a $2.00 per hour increase in wages, a longer lunch break, and cost-of-living adjustments, effective January 1, 2013.
- The company issued $200,000 in bonds that mature on October 10, 2022. The terms of the bond issuance stipulate that interest is to be paid semiannually at an annual rate of 10 percent.
- The company president retired and was replaced by the vice president of finance.
- The company received $10,000 from a customer in settlement of an open account receivable.
- The company paid $1,000 interest on an outstanding loan. The interest is applicable to September 2012 and is included on the books as a liability, “Accrued Interest Payable.”
- The market value of all the company”s long-lived assets is $275,000. They are currently reported on the balance sheet at $250,000.
- The company purchased a fire insurance policy for $1,500 that will pay the Brown Corporation $1 million if its primary production plant is destroyed. The policy insures the company from November 1, 2012, through October 31, 2013.
- The company placed an order to have $10,000 of inventory shipped on October 17, 2012.
Indicate whether each of these economic events has accounting significance (i.e., whether the company would prepare a journal entry for the event). In each case, explain why or why not.