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's 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:a. $1,760,528. b. $1,636,580. c. $1,584,476. d. $1,460,528...Pepsi Corporation's current ratio is 0.5, while Coke Company's current ratio is 1.5. Both firms want to "window dress" their coming end-of-year financial statements. As part of their window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions?a. The transactions will have no effect on the current ratios.b. The current ratios of both firms will be increased.c. The current ratios of both firms will be decreased.d. Only Pepsi Corporation's current ratio will be increased.e. Only Coke Company's current ratio will be increased. Rick transferred the following assets and liabilities to Walkin' D Corporation. Adjusted Basis Fair Market Value ($) Secure farmland Zombie killing equipment Escape vehicles Mortgage (held for four years) ($) 2,10,000 45,000 15,000 30,000 2,25,000 75,000 30,000 30,000 In return, Rick received $75,000 in cash plus 90% of Walkin's only class of stock outstanding (fair market value of $225,000). a. Rick has a recognized gain of $60,000. b. Rick has a recognized gain of $75,000. c. Rick's basis in the stock of Walkin' is $270,000. d. Warlkin' has the same basis in the assets received as Rick does in the stock. e. None of the above.

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's 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:a. $1,760,528. b. $1,636,580. c. $1,584,476. d. $1,460,528...Pepsi Corporation's current ratio is 0.5, while Coke Company's current ratio is 1.5. Both firms want to "window dress" their coming end-of-year financial statements. As part of their window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions?a. The transactions will have no effect on the current ratios.b. The current ratios of both firms will be increased.c. The current ratios of both firms will be decreased.d. Only Pepsi Corporation's current ratio will be increased.e. Only Coke Company's current ratio will be increased. Rick transferred the following assets and liabilities to Walkin' D Corporation. Adjusted Basis Fair Market Value ($) Secure farmland Zombie killing equipment Escape vehicles Mortgage (held for four years) ($) 2,10,000 45,000 15,000 30,000 2,25,000 75,000 30,000 30,000 In return, Rick received $75,000 in cash plus 90% of Walkin's only class of stock outstanding (fair market value of $225,000). a. Rick has a recognized gain of $60,000. b. Rick has a recognized gain of $75,000. c. Rick's basis in the stock of Walkin' is $270,000. d. Warlkin' has the same basis in the assets received as Rick does in the stock. e. None of the above.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 4P: Lessee Accounting Issues Timmer Company signs a lease agreement dated January 1, 2019, that provides...

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