On January 1, Year 1, Gearty Corporation loans Olinto Fabrix, Inc. $200,000 with a 10% simple interest
Question:
The following present value amounts are available.
As a result of this troubled debt restructuring, Gearty should record:
A) An extraordinary loss of $39,900.
B) An extraordinary loss of $56,100.
C) Bad debt expense of $64,480.
D) A valuation allowance of $61,240.
2. Bush Corporation signed a lease for equipment from EZ Leasing Company on January 1, Year 1, for a period of ten years at $50,000 per year, including insurance of $3,000 and taxes of $2,000 per year. The equipment had a useful life of fifteen years. At the end of the lease, Bush will have the option of buying the equipment outright for a dollar. Bush's incremental borrowing rate is 8%, and the rate implicit in the lease (which is known to Bush) is 6%. Lease payments are due every year on December 31. The present value of an annuity for various terms and rates are as follows:
On its financial statements for the year ended June 30, Year 1, Bush will display the following:Accumulated Equipment; Lease Depreciation; Accrued Payable; Interest
A) $331,200; $11,040; $331,200; $ 9,936
B) $368,000; $18,400; $306,960; $ 11,040
C) $301.950; $10,065; $301,950; $ 12,078
D) $437,040; $14,568; $331,200; $9,936
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell