ACC 577 OUTLET Learn by Doing/acc577outlet.com ACC 577 OUTLET Learn by Doing/acc577outlet.com | Page 20

On July 1, 2005, Glen Corp. leased a new machine from Ryan
Corp. The lease contains the following information: No
bargain purchase option is provided, and the machine reverts
to Ryan when the lease expires. What amount should Glen
record as a capitalized leased asset at inception of the lease?
Question 15
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.