Questions from Intermediate Accounting

Q: When are initial direct costs recognized in an operating lease? In

When are initial direct costs recognized in an operating lease? In a sales-type lease with selling profit? In a sales-type lease with no selling profit? Why?

Q: Amber Mining and Milling, Inc., contracted with Truax Corporation to

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2018. Amber paid for the lathe by i...

Q: On February 1, 2018, Cromley Motor Products issued 9%

On February 1, 2018, Cromley Motor Products issued 9% bonds, dated February 1, with a face amount of $80 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar...

Q: A zero-coupon bond pays no interest. Explain.

A zero-coupon bond pays no interest. Explain.

Q: McWherter Instruments sold $400 million of 8% bonds, dated

McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2018. The bonds mature on December 31, 2037 (20 years). For bonds of similar risk and maturity, the market yield was...

Q: The fiscal year ends December 31 for Lake Hamilton Development. To

The fiscal year ends December 31 for Lake Hamilton Development. To provide funding for its Moonlight Bay project, LHD issued 5% bonds with a face amount of $500,000 on November 1, 2018. The bonds sold...

Q: On January 1, 2018, Darnell Window and Pane issued $

On January 1, 2018, Darnell Window and Pane issued $18 million of 10-year, zero-coupon bonds for $5,795,518. Required: 1. Prepare the journal entry to record the bond issue. 2. Determine the effectiv...

Q: At the beginning of the year, Lambert Motors issued the three

At the beginning of the year, Lambert Motors issued the three notes described below. Interest is paid at year-end. 1. The company issued a two-year, 12%, $600,000 note in exchange for a tract of land....

Q: At January 1, 2018, Brant Cargo acquired equipment by issuing

At January 1, 2018, Brant Cargo acquired equipment by issuing a five-year, $150,000 (payable at maturity), 4% note. The market rate of interest for notes of similar risk is 10%. Required: 1. Prepare...

Q: At the beginning of 2018, VHF Industries acquired a machine with

At the beginning of 2018, VHF Industries acquired a machine with a fair value of $6,074,700 by issuing a four-year, noninterest-bearing note in the face amount of $8 million. The note is payable in fo...