ACCT 304

ACCT 304 Final Exam 100 Correct Answers ACTIVITY BASED COSTING If a predetermined overhead rate is not employed and the volume of production is increased over the level planned the cost per unit would be expected to A Decrease for fixed costs and remain unchanged for variable costs B Remain unchanged for fixed costs and increase for variable costs C Decrease for fixed costs and increase for variable costs D Increase for fixed cos

45 Other / Other allied-american-university / ACCT 304 06 Nov 2015

ACCT 304 Chapter 16 QUIZ P21 7 Lessee Entries and Balance Sheet Presentation Capital Lease Ludwick Steel Company as lessee signed a lease agreement for equipment for 5 years, beginning December 31, 2012. Annual rental payments of $40,000 are to be made at the beginning of each lease year (December 31). The taxes, insurance, and the maintenance costs are the obligation of the lessee. The interest rate used by the lessor in setting the payment

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ P21 6 Lessee Entries with Residual Value The following facts pertain to a noncancelable lease agreement between Faldo Leasing Company and Vance Company, a lessee. Inception date January 1, 2012 Annual lease payment due at the beginning of each year, beginning with January 1, 2012 $124,798 Residual value of equipment at end of lease term, guaranteed by the lessee $50,000 Lease term 6 years Economic life of leased

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E 21 15 Sale Leaseback Assume that on January 1 2012 Elmers Restaurants sells a computer system to Liquidity Finance Co. for $510,000 and immediately leases the computer system back. The relevant information is as follows. 1. The computer was carried on Elmer’s books at a value of $450,000. 2. The term of the noncancelable lease is 10 years; title will transfer to Elmer. 3. The lease agreement requires equal

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E21 14 Operating Lease for Lessee and Lessor On February 20 2012 Hooke Inc purchased a machine for $1,200,000 for the purpose of leasing it. The machine is expected to have a 10-year life, no residual value, and will be depreciated on the straight-line basis. The machine was leased to Sage Company on March 1, 2012, for a 4-year period at a monthly rental of $15,600. There is no provision for the renewal of the lease o

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E21 12 Accounting for an Operating Lease On January 1 2012 Secada Co leased a building to Ryker Inc. The relevant information related to the lease is as follows. 1. The lease arrangement is for 10 years. 2. The leased building cost $3,600,000 and was purchased for cash on January 1, 2012. 3. The building is depreciated on a straight-line basis. Its estimated economic life is 50 years with no salvage value. 4. Leas

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E21 6 Lessor Entries, Sales Type Lease Wadkins Company a machinery dealer leased a machine to Romero Corporation on January 1, 2012. The lease is for an 8-year period and requires equal annual payments of $38,514 at the beginning of each year. The first payment is received on January 1, 2012. Wadkins had purchased the machine during 2011 for $170,000. Collectibility of lease payments is reasonably predictable, and n

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E21 5 Type of Lease Amortization Schedule Jacobsen Leasing Company leases a new machine that has a cost and fair value of $75,000 to Stadler Corporation on a 3-year noncancelable contract. Stadler Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2012. Jaco

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E21 4 Lessor Entries Direct Financing Lease with Option to Purchase Krauss Leasing Company signs a lease agreement on January 1, 2012, to lease electronic equipment to Stewart Company. The term of the noncancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement. 1. Stewart has the option to purchase the equipment for $16,000 upon termination

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015

ACCT 304 Chapter 16 QUIZ E213 Lessee Entries Capital Lease with Executory Costs and Unguaranteed Residual Value Assume that on January 1, 2012, Kimberly-Clark Corp. signs a 10-year noncancelable lease agreement to lease a storage building from Trevino Storage Company. The following information pertains to this lease agreement. 1. The agreement requires equal rental payments of $90,000 beginning on January 1, 2012. 2. The fair value of the bu

2 Other / Other allied-american-university / ACCT 304 06 Aug 2015