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
Gei Co. determined that, due to obsolescence, equipment with
an original cost of $900,000 and accumulated depreciation at
January 1, 2004 of $420,000 had suffered permanent
impairment, and as a result should have a carrying value of
only $300,000 as of the beginning of the year. In addition, the
remaining useful life of the equipment was reduced from 8
years to 3. In its December 31, 2004 balance sheet, what
amount should Gei report as accumulated depreciation?
Question 11
Dahl Co. traded a delivery van and $5,000 cash for a newer
van owned by West Corp. Assume there is no commercial
substance to the exchange. The following information relates to
the values of the vans on the exchange date: Dahl's income tax