Questions from Financial Reporting

Q: On January 1, 2017, Bill Inc. leases manufacturing equipment

On January 1, 2017, Bill Inc. leases manufacturing equipment from Beatrix Corporation. The lease covers seven years and requires annual lease payments of $51,000, beginning on January 1, 2017. The ung...

Q: On January 1, 2017, Bare Trees Company signed a three

On January 1, 2017, Bare Trees Company signed a three-year noncancelable lease with Dreams Inc. The lease calls for three payments of $62,258.09 to be made at each year-end. The lease payments include...

Q: On January 1, 2017, Task Co. signs an agreement

On January 1, 2017, Task Co. signs an agreement to lease office equipment from Coleman Inc. for three years with payments of $193,357 beginning December 31, 2017. The equipment’s fair value is $500,00...

Q: Using the data in P12–6, prepare the journal entries

Using the data in P12–6, prepare the journal entries required by Coleman Inc. on January 1, 2017, assuming that (a) Task does not guarantee the residual value and (b) Task does guarantee it. Coleman...

Q: Kingston Corporation adopted ASU 2016-02 on January 1, 2017

Kingston Corporation adopted ASU 2016-02 on January 1, 2017. On December 31, 2017, Thomas Henley, financial vice president of Kingston Corporation, signed a noncancelable three-year lease for a excava...

Q: On July 1, 2017, Burgundy Studios leases camera equipment from

On July 1, 2017, Burgundy Studios leases camera equipment from Corningstone Corporation. The lease covers eight years and requires lease payments of $42,000, beginning on July 1, 2017. The unguarantee...

Q: Mozart Inc.’s $98,000 taxable income for 2017

Mozart Inc.’s $98,000 taxable income for 2017 will be taxed at the 35% corporate tax rate. For tax purposes, its depreciation expense exceeded the depreciation used for financial reporting purposes by...

Q: Southwest Airlines Co. is a major airline that operates in the

Southwest Airlines Co. is a major airline that operates in the United States. Refer to the following information from Southwest Airlines’ 2015 3rd quarter 10-Q. 3. FINANCIAL DER...

Q: In 2017, Phillips Company reported $10,000 of pre

In 2017, Phillips Company reported $10,000 of pre-tax book income and also had $10,000 of taxable income. It incurred a $1,000 book expense that it deducted on its tax return. Assuming a 35% tax rate,...

Q: In 2017, MB Inc. is subject to a 35%

In 2017, MB Inc. is subject to a 35% tax rate. For book purposes, it expenses $1,500 of expenditures. MB intends to deduct these expenditures on its 2017 tax return despite tax law precedent that make...