Advertising costs may be accrued or deferred to provide an
appropriate expense in each period for
Question 3
Ace Co. settled litigation on February 1, 2005 for an event that
occurred during 2004. An estimated liability was determined
as of December 31, 2004. This estimate was significantly less
than the final settlement. The transaction is considered to be
material. The financial statements for year-end 2004 have not
been issued. How should the settlement be reported in Ace's
year-end 2004 financial statements?
Question 4
When should a lessor recognize in income a nonrefundable
lease bonus paid by a lessee on signing an operating lease?
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?