What the bond markets and the financial press are

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Problem 1: Happy Corporation leased a building from Sensor Company. The ten-year lease is recorded as a capital lease. The annual payments are $10,000, and the recorded cost of the asset is $67,100. The straight-line method is used to calculate depreciation. Which of the following statements is true?

a. Depreciation expense of $10,000 will be recorded each year.
b. No interest expense will be recorded by Happy Corporation.
c. Depreciation expense of $6,710 will be recorded each year.
d. No depreciation expense will be recorded by Happy Corporation.

Problem 2: Flagg Company issued $500,000 of bonds for $498,351. Interest is paid semiannually. The bond markets and the financial press are likely to state the bond issue price as

a. 49.84.
b. 100.00.
c. 498.35.
d. 99.67.

Reference no: EM132826431

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