Scott Co. exchanged nonmonetary assets with Dale Co. No cash was exchanged. There is commercial substance to the exchange. The carrying amount of the asset surrendered by Scott exceeded both the fair value of the asset received and Dale ' s carrying amount of that asset. Scott should recognize the difference between the carrying amount of the asset it surrendered and
Question 16
Lease A does not contain a purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases?
Question 17
On December 31, 2005, Bit Co. had capitalized costs for a new computer software product with an economic life of five years. Sales for 2006 were 30 percent of expected total sales of the software. At December 31, 2006, the software had a net realizable value equal to 90 percent of the capitalized cost. What percentage of the original capitalized cost should be reported as the net amount on Bit ' s December 31, 2006 balance sheet?
Question 18
On January 1, 2001, Babson, Inc. leased two automobiles for executive use. The lease requires Babson to make five annual