Questions from Financial Accounting

Q: In what ways is a lessee’s capital lease similar to, and

In what ways is a lessee’s capital lease similar to, and different from, purchasing the equipment using the proceeds of a loan repayable in installments?

Q: The lessor who manufactured the equipment it leases to the lessee recognizes

The lessor who manufactured the equipment it leases to the lessee recognizes the same amount of income (revenue minus expenses) over the term of a lease as the lessee recognizes as expenses.” Do you a...

Q: Find the interest rate implicit in a loan of $100,

Find the interest rate implicit in a loan of $100,000 that the borrower discharges with two annual installments of $55,307 each, paid at the end of each of the next two years.

Q: If permitted, a lessee generally prefers to account for leases using

If permitted, a lessee generally prefers to account for leases using the operating lease method for financial reporting and the capital lease method for tax reporting.” Explain.

Q: If permitted, a lessor generally prefers to account for leases using

If permitted, a lessor generally prefers to account for leases using the capital lease method for financial reporting and the operating lease method for tax reporting.” Explain.

Q: Using amortized cost based on the historical market interest rate to account

Using amortized cost based on the historical market interest rate to account for bonds in periods subsequent to their initial issuance provides a carrying value for bonds that is consistent with using...

Q: Applying the effective interest method using the historical market interest rate gives

Applying the effective interest method using the historical market interest rate gives a constant amount of interest expense on bonds each period.” Do you agree? If not, how would you change the state...

Q: A firm issues two bonds with identical issue prices, market-

A firm issues two bonds with identical issue prices, market-required yields, and final maturity dates. One bond is a semiannual coupon bond, and the other bond is a serial bond. Will the total interes...

Q: Firm A issues $1,000,000 face value,

Firm A issues $1,000,000 face value, 9% semiannual coupon bonds at a price to yield 8% compounded semiannually. Firm B issues $1,000,000 face value, 7% semiannual coupon bonds at a price to yield 8% c...

Q: The total effect on income before income taxes over the life of

The total effect on income before income taxes over the life of a bond that a firm repays at maturity will be the same whether the firm accounts for the bond using amortized cost measurement based on...