Reference no: EM133085591
Questions -
Q1. On August 1, 2021, Dani Corporation leased a machine to Sam Corporation for a 6-year period requiring payments of $100,000 at the end of each year. The machine cost $480,000, with an economic life of 8 years and no residual value. Dani's implicit interest rate is 10% and present value factors are as follows: Present value of annuity due of P1 at 10% for 6 periods - 4.791; Present value of an annuity of P1 at 10% for 8 periods - 5.868. Dani recorded the lease as a direct financing lease. What amount is the gross lease receivable account balance at the inception of the lease?
Q2. At the beginning of 2020, Valo Corporation leased an equipment with the following information: Annual rental payable at the end of each year - $450,000; residual value guarantee - $50,000; Lease incentive received - $20,000; Lease term - 4 years; Useful life of the equipment - 8 years; implicit interest rate - 10%; present value of an ordinary annuity of 1 at 10% for 4 periods - 3.17; present value of 1 at 10% for 4 periods - 0.68. How much is the cost of right of use asset?
Q3. Curie Company leased equipment to a lessee on April 1, 2021 for an 8-year period expiring April 1, 2029. Equal payments under the lease are $600,000 and are due on April 1 of each year. The first payment was made on April 1, 2021. The list selling price of the equipment is $3,520,000 and the carrying amount is $2,800,000. The lease is appropriately accounted for as a sales-type lease. The present value of the lease payments is $3,300,000. How much is the amount of profit on the sale that should be reported for 2021?
Q4. On January 1, 2020, Barn Corporation granted the president, 20,000 share appreciation rights for past services. Those rights are exercisable immediately and expire on January 1, 2023. On exercise, the grantee is entitled to receive cash for the excess of the market price on the exercise date over the market price on the grant date. The grantee did not exercise any of the rights in 2020. The market price of share was $30 on January 1, 2020 and $45 on December 31, 2020. How much should be recognized as compensation expense for 2020?
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What amount should be reported as retained earnings
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How much should be recognized as compensation expense
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