Question 5
In a sale-leaseback transaction, a gain resulting from the sale should be deferred at the time of the sale-leaseback and subsequently amortized when. I. The seller-lessee has transferred substantially all the risks of ownership. II. The seller-lessee retains the right to substantially all of the remaining use of the property.
Question 6
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