lone star company would account for this as a a capital 240235

Lone Star Company would account for this as:

A. A capital lease.

B. A direct financing lease.

C. A sales type lease.

D. An operating lease.

What is the net carrying value of the lease liability in Lone Star’s June 30, 2011 balance sheet? Round your answer to the nearest dollar.

A. $15,943,154

B. $17,533,246

C. $21,000,000

D. None of the above is correct.

What is the interest revenue that Technoid would report on this lease in its 2011 income statement? ?A. $0?B. $1,673,820?C. $876,662?D. None of the above is correct.

If the lessor records unearned rent at the beginning of a lease term, the lease must:

Be a direct financing lease.

Be a sales-type lease.

Contain a bargain renewal option.

D. Be an operating lease.

On September 1, 2011, Custom Shirts Inc. entered into a lease agreement appropriately classified as an operating lease. The lease term is 3 years. The annual payments are (a) $20,000 for year 1, (b) $24,000 for year 2, and (c) $28,000 for year 3. How much rent expense will Custom Shirts recognize for 2011?

A. $6,667.?B. $24,000.?C. $20,000.?D. $8,000.

The lessee normally measures the lease liability to be recorded as the:

The future value of the minimum lease payments.

The sum of the cash payments over the term of the lease.

Present value of the minimum lease payments.

D. The fair market value of the leased asset.

Leasehold improvements usually are classified in a balance sheet as:

Property, plant and equipment.

Other long-term assets.

C. Investments.?D. Expenses.

For a capital lease, an amount equal to the present value of the minimum lease payments should be recorded by the lessee as a(n):

Asset and a liability.

Asset and a different amount should be recorded as a liability.

Liability and a different amount should be recorded as an asset.

D. Expense.

Since the lease payments under a lease agreement are normally paid at the beginning of each period, the appropriate compound interest table to be used to determine the amount at which the leased asset should be recorded is the:

Ordinary annuity table.

Present value of $1 table.

Present value of an annuity due table.

D. Future value of an annuity due table.

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