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6) Quattro Corporation signed a lease from Cinco L...

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6) Quattro Corporation signed a lease from Cinco Leasing Company of July 1 Year 1, for equipment having a five-year useful life. The lease does not include any option to purchase the equipment at the end of the four-year lease term, nor does it include a provision for ownership transfer. Five equal payments of $10,000 per year are required by the term of the lease, with the first payment due upon signing. Quattro?s incremental borrowing rate is 8%, but its implicit interest rate is unknown. Present value of an annuity at 8% for 5 years = 3.993 Present value of an annuity at 8% for 4 years = 3.312 On its December 31, 20X3 financial statements, Quatto would display the following amounts in the indicated accounts: Equipment ; Accumulated Depreciation; Lease Payable e) $0;$0;$0 f) $43,120; $5,390; $33,120 g) $43,120; $4,312; $33,120 h) $49,930; $6,241; $39,930 7) Finance Here Sales & Service provides leased-based financing for its full line of commercial generators. Sales of the generators are properly accounted for as operating sales-type leases. Terms of the leases include return of the generators to Finance Here Sales & Service for resale in secondary markets. The company estimates that the non-guaranteed residual values on generators are equal to an average of 10 percent of the historical cost of the generators. Finance Here Sales & Service can expect that: ?? A) Cost of goods sold will be equal to the historical cost of the generators sold. ? B) Cost of goods sold will be greater than the historical cost of the generators sold. ? C) Cost of goods sold will be less than the historical cost of the generators sold. ? D) The relationship of cost of goods sold and the historical cost of the generators cannot be determined. 8) Capius Corporation issued 2000 bonds in $1000 individual denominations. Each bond has twenty detachable warrants. The bonds and warrants were sold at 110. At the time the bond were issued each warrant had a market value to one percent of the face value of one bond. Capius will account for this transaction as: E) Bond payable with an unamortized premium and a credit to Additional Paid In Capital Warrants F) Bond payable with an unamortized premium and a debit to Additional Paid In Capital Warrants G) Bond payable with an unamortized discount and a credit to Additional Paid In Capital Warrants H) Bond payable with an unamortized discount and a debit to Additional Paid In Capital Warrants,Michael,thank you so much, this has really helped! I will continue to come to you for assistance, I am so grateful!,Here are some more questions that I have for you. Thank you again, and PLEASE be sure to let me know how I can leave the best feedback for you!! 1) White Industries started their operations on January 1, Year 1 and recorded $400,000 in warranty expense during the year. Warranty expense was the only difference between the company's pretax financial income and its tax return income of $900,000. White will be required to pay these warranties at a rate of $100,000 per year beginning in Year 2. Although White fully expects to earn in excess of $100,000 in Year 2 and Year 3, the company believes it is more likely than not that it will incur a loss after Year 3. The enacted tax rate is 25% in current and future periods. What will White record as its income tax expense in Year 1? A. $100,000 B. $125,000 C. $175,000 D. $225,000 2) Erika?s Surf Shop had taxable income in Year 2 of $500,000 and pretax financial income of $600,000. The company had a cumulative $200,000 difference between its taxable income and pretax financial statement income at December 31, Year 1. These differences were solely related to accelerated depreciation methods used for income tax purposes. The enacted tax rate increased to 30 percent in Year 2 compared to an enacted rate of 20 percent in the prior year. At December 31, Year 2, the company would record a deferred tax expense of: A. $40,000 B. $50,000 C. $90,000 D. $150,000 3) For the year ended December 31, Laramie Industries has a depreciation expense per its tax return greater than its financial statement tax expense, and had recorded warranty expense (associated with a one-year guarantee on its products) in its financial statements. Pretax income is less than tax return income as a result of these reconciling items. As a result of these transactions, Laramie will display: A. A current deferred tax asset and noncurrent deferred tax liability B. A noncurrent deferred tax asset and a current deferred tax liability C. A net current tax asset D. A net noncurrent tax asse

 

Paper#9384 | Written in 18-Jul-2015

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