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