AC 302 Week 6 Quiz 100% Correct

AC 302 Week 6 Quiz 100% Correct
Question 1	On December 31 2014 Lang Corporation leased a ship from Fort Company for an eight-year period expiring December 30, 2022. Equal annual payments of $300,000 are due on December 31 of each year, beginning with December 31, 2014. The lease is properly classified as a capital lease on Lang ‘s books. The present value at December 31, 2014 of the eight lease payments over the lease term discounted at 10% is $1,760,528. Assuming all payments are made on time, the amount that should be reported by Lang Corporation as the total obligation under capital leases on its December 31, 2015 balance sheet is




Question 2.	Question :	The methods of accounting for a lease by the lessee are



Question 3.	Question :	On December 31, 2015, Kuhn Corporation leased a plane from Bell Company for an eight-year period expiring December 30, 2022. Equal annual payments of $300,000 are due on December 31 of each year, beginning with December 31, 2015. The lease is properly classified as a capital lease on Kuhn- books. The present value at December 31, 2015 of the eight lease payments over the lease term discounted at 10% is $1,760,528. Assuming the first payment is made on time, the amount that should be reported by Kuhn Corporation as the lease liability on its December 31, 2015 balance sheet is


Question 4.	Question :	Haystack, Inc. manufactures machinery used in the mining industry. On January 2, 2015 it leased equipment with a cost of $320,000 to Silver Point Co. The 5-year lease calls for a 10% down payment and equal annual payments of $146,518 at the end of each year. The equipment has an expected useful life of 5 years. Silver Point- incremental borrowing rate is 10%, and it depreciates similar equipment using the double-declining balance method. The selling price of the equipment is $520,000, and the rate implicit in the lease is 8%, which is known to Silver Point Co. What is the book value of the leased asset at December 31, 2015?



Question 5.	Question :	A lessee with a capital lease containing a bargain purchase option should depreciate the leased asset over the