Questions from Financial Reporting

Q: Zero coupon bonds pay no interest—the only cash investors receive

Zero coupon bonds pay no interest—the only cash investors receive is the lump-sum principalpayment at maturity. On January 1, 20X1, The Ledge Inc. issued $250 million of zero couponbonds at a market y...

Q: On January 1, 20X1, Brooks Energy issued $200 million

On January 1, 20X1, Brooks Energy issued $200 million of 15-year, floating-rate debentures atpar value. The debentures pay interest on June 30 and December 31 of each year. The floatinginterest rate i...

Q: First Solar, Inc., adopted the new revenue recognition standard,

First Solar, Inc., adopted the new revenue recognition standard, ASC Topic 606, in 2017. The following are condensed versions of First Solar’s balance sheet, income statement, and cash flow statement,...

Q: On January 1, 20X0, Roland Inc. issued $125

On January 1, 20X0, Roland Inc. issued $125 million of 8% bonds at par. The bonds pay interest semiannually on June 30 and December 31 of each year, and they mature in 15 years. OnDecember 31, 20X1 (b...

Q: Monk Company, a dealer in machinery and equipment, leased equipment

Monk Company, a dealer in machinery and equipment, leased equipment with a 10-year life to Leland Inc. on July 1, 20X1. The fair value of the leased equipment at July 1, 20X1, is $1,849,591. The lease...

Q: On January 1, 20X1, Babson, Inc., leased two

On January 1, 20X1, Babson, Inc., leased two automobiles for executive use. The lease requires Babson to make five annual payments of $13,000, beginning January 1, 20X1. At the end of thelease term on...

Q: On December 31, 20X1, Roe Company leased a machine from

On December 31, 20X1, Roe Company leased a machine from Colt for a five-year period. Equal annual payments under the lease are $105,000 (including $5,000 annual executory costsfor servicing) and are d...

Q: On December 31, 20X1, Lane, Inc., sold equipment

On December 31, 20X1, Lane, Inc., sold equipment to Nolte and simultaneously leased it backfor 12 years. Pertinent information at this date is as follows: Required: 1. At December 31, 20X1, should La...

Q: Mickelson reports on a calendar-year basis. On January 1

Mickelson reports on a calendar-year basis. On January 1, 20X1, Mickelson Corporation entersinto a three-year lease with annual payments of $30,000. The first payment will be due on December 31, 20X1....

Q: On January 1, 20X1, Draper Inc. signed a five

On January 1, 20X1, Draper Inc. signed a five-year non cancelable lease with Thorn hill Company for custom-made equipment. The lease calls for five payments of $161,364.70 to bemade at the beginning o...