PROBLEM 06 - ASSET RECOGNITION Indicate whether or not each of the following items should be recognized as an asset. 1. A union collective agreement that promises a higher quality of performance in the upcoming year. 2. A piece of machinery worth $1,000, originally purchased for use, but subsequently retired from use and awaiting sale. 3. The company's own shares purchased back from the original shareholders. 4. Cash held in a fund by a firm's trustee, to be used to retire bonds in five years. 5. Cash received from subscribers for publications to be shipped next year 6. Costs incurred to develop a new patent. 7. Interest to be received for the previous six months, on a long-term note receivable. 8. The value to be derived by the firm from having a key location for selling its product. 9. The benefit to the firm of its employees receiving advanced college degrees. 10. The goodwill paid for when acquiring another business enterprise. PROBLEM 07 - LIABILITY RECOGNITION Indicate whether or not each of the following items should be recognized as a liability for the organization: 1. The obligation to pay interest next year on bonds that were issued on the balance sheet date. 2. The obligation to pay workers for services already rendered. 3. An agreement to purchase inventory in the following year 4. An agreement to publish and ship magazines next year for cash already received. 5. The obligation to pay dividends from income earned next year 6. Unpaid income taxes from the current year 7. The burden of having a senile president. 8. The obligation of the president to pay for his son's traffic fines. 9. The expectation of replacing worn-out equipment. 10. The obligation to repay a loan made in the current year and due in five years