Questions from Intermediate Accounting

Q: Eye Deal Optometry leased vision-testing equipment from Insight Machines on

Eye Deal Optometry leased vision-testing equipment from Insight Machines on January 1, 2018. Insight Machines manufactured the equipment at a cost of $200,000 and lists a cash selling price of $250,17...

Q: At January 1, 2018, Café Med leased restaurant equipment from

At January 1, 2018, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $25,000 beginning January 1, 2018...

Q: Cordova Tools has bonds outstanding during a year in which the market

Cordova Tools has bonds outstanding during a year in which the market rate of interest has risen. If Cordova has elected the fair value option for the bonds, will it report a gain or a loss on the bon...

Q: What is a purchase option? How does it affect accounting for

What is a purchase option? How does it affect accounting for a lease?

Q: HP Inc. (formerly Hewlett-Packard Company) issued zero

HP Inc. (formerly Hewlett-Packard Company) issued zero-coupon notes at the end of its 1997 fiscal year that mature at the end of its 2017 fiscal year. One billion, eight hundred million dollars face a...

Q: When a company sells an asset and simultaneously leases it back,

When a company sells an asset and simultaneously leases it back, what criteria must be met to apply sale-leaseback accounting rather than accounting for the transaction as a loan ?

Q: The following transactions relate to bond investments of Livermore Laboratories. The

The following transactions relate to bond investments of Livermore Laboratories. The company’s fiscal year ends on December 31. Livermore uses the straight-line method to determine interest. 2018 July...

Q: On June 30, 2018, Georgia-Atlantic, Inc.

On June 30, 2018, Georgia-Atlantic, Inc. leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $562,907 over a th...

Q: On March 1, 2018, Baddour, Inc., issued 10

On March 1, 2018, Baddour, Inc., issued 10% bonds, dated January 1, with a face amount of $160 million. The bonds were priced at $140 million (plus accrued interest) to yield 12%. Interest is paid sem...

Q: At January 1, 2018, Rothschild Chair Company, Inc.,

At January 1, 2018, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2015, and was due December 31, 2021. Annu...