The following information pertains to a sale and leaseback of equipment by Mega Co. on December 31, 2005: What amount of deferred gain on the sale should Mega report at December 31, 2005?
Question 7
On August 1, 2005, Metro, Inc. leased a luxury apartment unit to Klum. The parties signed a 1-year lease beginning September 1, 2005 for a $ 1,000 monthly rent payable on the first day of the month. At the August 1 signing date, Metro collected $ 540 as a nonrefundable fee for allowing Klum to sign a 1-year lease( the normal lease term is three years) and $ 1,000 rent for September. Klum has made timely payments each month, but prepaid January ' s rent on December 20. In Metro ' s 2005 income statement, rent revenue should be reported as
Question 8
On January 1 of the current year, Tell Co. leased equipment from Swill Co. under a nine-year sales-type lease. The equipment had a cost of $ 400,000 and an estimated useful life of 15 years. Semiannual lease payments of $ 44,000 are due every January 1 and July 1. The present value of lease payments at 12 % was $ 505,000, which equals the sales price of the equipment. Using the straight-line method, what amount should Tell recognize as depreciation expense on the equipment in the current year?
Question 9
A twenty-year property lease, classified as an operating lease, provides for a 10 % increase in annual payments every five years. In the sixth year compared to the fifth year, the lease will cause the following expenses to increase
Question 10
Gei Co. determined that, due to obsolescence, equipment with an original cost of $ 900,000 and accumulated depreciation at January 1,