405quiz4pinksummer2011solution

405quiz4pinksummer2011solution - Name_ Quiz 4 ACCT 405...

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Name_____________________ Quiz 4 ACCT 405 Summer II Pink 1 Pisa, Inc. leased equipment from Tower Company under a four-year lease requiring equal annual payments of $86,038, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. If Pisa, Inc.’s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%, what is the amount recorded for the leased asset at the lease inception? PV Annuity Due PV Ordinary Annuity 8%, 4 periods 3.57710 3.31213 10%, 4 periods 3.48685 3.16986 a. $307,767 86038 x 3.57710 = 307,767 b. $272,728 c. $284,969 d. $300,000 2. The following information is related to the pension plan of Long, Inc. for 2011. Actual and expected return on plan assets $230,000 Amortization of net gain 82,500 Amortization of prior service cost due to increase in benefits 150,000 Interest on projected benefit obligation
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This note was uploaded on 11/05/2011 for the course ACCT 405 taught by Professor Caylor during the Summer '11 term at South Carolina.

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405quiz4pinksummer2011solution - Name_ Quiz 4 ACCT 405...

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