Party recording the party recording asset on its

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Party recording the Party recording asset on its books interest expense a. Seller-lessee Purchaser-lessor b. Purchaser-lessor Seller-lessee c. Purchaser-lessor Purchaser-lessor d. Seller-lessee Seller-lessee *50. In a sale-leaseback transaction where none of the four leasing criteria are satisfied, which of the following is false? a. The seller-lessee removes the asset from its books. b. The purchaser-lessor records a gain. c. The seller-lessee records the lease as an operating lease. d. All of the above are false statements. 21 - 11
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Test Bank for Intermediate Accounting, Thirteenth Edition *51. When a company sells property and then leases it back, any gain on the sale should usually be a. recognized in the current year. b. recognized as a prior period adjustment. c. recognized at the end of the lease. d. deferred and recognized as income over the term of the lease. Multiple Choice Answers —Conceptual Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 21. d 26. b 31. d 36. a 41. a 46. d *51. d 22. d 27. b 32. c 37. d 42. c 47. c 23. b 28. a 33. a 38. a 43. c 48. c 24. c 29. c 34. b 39. c 44. b *49. d 25. a 30. d 35. a 40. d 45. c *50. b MULTIPLE CHOICE —Computational 52. On December 1, 2011, Goetz Corporation leased office space for 10 years at a monthly rental of $90,000. On that date Perez paid the landlord the following amounts: Rent deposit $ 90,000 First month's rent 90,000 Last month's rent 90,000 Installation of new walls and offices 495,000 $765,000 The entire amount of $765,000 was charged to rent expense in 2011. What amount should Goetz have charged to expense for the year ended December 31, 2011? 53. On January 1, 2011, Dean Corporation signed a ten-year noncancelable lease for certain machinery. The terms of the lease called for Dean to make annual payments of $100,000 at the end of each year for ten years with title to pass to Dean at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Dean uses the straight-line method of depreciation for all of its fixed assets. Dean accordingly accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $671,008 at an effective interest rate of 8%. With respect to this capitalized lease, Dean should record for 2011 21 - 12
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Accounting for Leases
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