Quattro Corporation signed a lease from Cinco Leasing Company on July 1, Year 1, for equipment having a five-year useful life. The lease does not include any option to purchase the equipment at the end of the four-year lease term, nor does it include a provision for ownership transfer. Five equal payments of USD10,000 per year are required by the terms of the lease, with the first payment due upon signing. Quattro's incremental borrowing rate is 8 percent, but its implicit interest rate is unknown.Present value of an annuity at 8% for 5 years = 3.993Present value of an annuity at 8% for 4 years = 3.312On its December 31, Year 1, financial statements, Quattro would display the following amounts in the indicated accounts under U.S. GAAP:

1 .Which of the following is a characteristic of a capital lease under U.S. GAAP?

A The future obligation does not appear in the balance sheet of the lessee. B The present value of the minimum lease payments at the beginning of the lease term is 75% or more of the fair value of the property at the inception of the lease. C The lease contains a bargain-purchase option. D The lease...

题型: 单选题 提问时间: 2021-08-24

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2 .On January 1, Year 1, Frost Co. entered into a two-year lease agreement with Ananz Co. to lease 10 new computers. The lease term begins on January 1, Year 1 and ends on December 31, Year 2. The lease agreement requires Frost to pay Ananz two annual lease payments of USD8,000. The present value of the minimum lease payments is USD13,000. Which of the following circumstances would require Frost to classify and account for the arrangement as a capital lease under U.S. GAAP?

A Ownership of the computers remains with Ananz throughout the lease term and after the lease ends. B Frost does not have the option of purchasing the computers at the end of the lease term. C The fair value of the computers on January 1, Year 1 is USD14,000. D The economic life of the computers is ...

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3 .On December 30, Year 1, Rafferty Corp. leased equipment under a capital (finance) lease. Annual lease payments of USD20,000 are due December 31 for 10 years. The equipment's useful life is 10 years, and the interest rate implicit in the lease is 10%. The capital (finance) lease obligation was recorded on December 30 Year 1, at USD135,000, and the first lease payment was made on that date. What amount should Rafferty include in current liabilities for this capital lease in its December 31, Year 1 balance sheet?

A USD20,000 B USD11,500 C USD8,500 D USD6,500

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4 .On January 2, Year 1, Marx Co. as lessee signed a five-year noncancelable equipment lease with annual payments of USD200,000 beginning December 31, Year 1. Marx treated this transaction as a capital (finance) lease. The five lease payments have a present value of USD758,000 at January 2, Year 1, based on interest of 10%. What amount should Marx report as interest expense for the year ended December 31, Year 1?

A USD0 B USD48,400 C USD75,800 D USD55,800

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5 .Koby Co. entered into a capital lease with a vendor for equipment on January 2 for seven years. The equipment has no guaranteed residual value. The lease required Koby to pay USD500,000 annually on January 2, beginning with the current year. The present value of an annuity due for seven years was 5.35 at the inception of the lease. What amount should Koby capitalize as leased equipment?

A USD3,500,000 B USD500,000 C USD825,000 D USD2,675,000

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7 .Howe Co. leased equipment to Kew Corp. on January 2, Year 1, for an eight-year period expiring December 31, Year 8. Equal payments under the lease are USD600,000 and are due on January 2 of each year. The first payment was made on January 2, Year 1. The list selling price of the equipment is USD3,520,000 and its carrying cost on Howe's books is USD2,800,000. The lease is appropriately accounted for as a sales-type (finance) lease. The present value of the lease payments at an imputed interest rate of 12% (Howe's incremental borrowing rate) is USD3,300,000. What amount of profit on the sale should Howe report for the year ended December 31, Year 1?

A USD720,000 B USD500,000 C USD0 D USD90,000

题型: 单选题 提问时间: 2021-08-24

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8 .The following information pertains to a sale and leaseback of equipment by Mega Co. on December 31, Year 1:Sales priceUSD400,000Carrying amount300,000Monthly lease payments3,250Present value of lease payments36,900The estimated remaining life of the asset is 25 years and the lease term is 1 year. Mega uses IFRS. The sales price is equal to the fair value of the leaseback asset. What amount of deferred gain on the sale should Mega report at December 31, Year 1?

A USD100,000 B USD63,100 C USD0 D USD36,900

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9 .On January 2, Year 1, Nast Co. issued 8% bonds with a face amount of USD1,000,000 that mature on January 2, Year 7. The bonds were issued to yield 12%, resulting in a discount of USD150,000. Nast incorrectly used the straight-line method instead of the effective interest method to amortize the discount. How is the carrying amount of the bonds affected by the error?

A At December 31, Year 1Overstated;At January 2, Year 7Understated B At December 31, Year 1Understated;At January 2, Year 7No effect C At December 31, Year 1Overstated;At January 2, Year 7No effect D At December 31, Year 1Understated;At January 2, Year 7Overstated

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10 .On January 31, Year 2, Beau Corp. issued USD300,000 maturity value, 12% bonds for USD300,000 cash. The bonds are dated December 31, Year 1, and mature on December 31, Year 11. Interest will be paid semi-annually on June 30 and December 31. What amount of accrued interest payable should Beau report in its September 30, Year 2 balance sheet?

A USD24,000 B USD9,000 C USD18,000 D USD27,000

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