A company leases trucks and properly classifies the leases as finance leases

A company leases trucks and properly classifies the

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A company leases trucks and properly classifies the leases as finance leases. The leases have a 10-year term, and the lease calculations were done 3 years ago when interest rates were lower. Which of thefollowing is the appropriate accounting treatment, if any, for the application of the fair value option to leasetransactions?
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Leases are not eligible for the fair value option.Inch Co. had the following balances at December 31, Year 4:Cash in checking account$ 35,000Cash in money market account75,000U.S. Treasury bill, purchased 12/1/Yr 4, maturing 2/28/Yr 5200,000U.S. Treasury bill, purchased 12/1/Yr 3, maturing 5/31/Yr 5150,000Inch’s policy is to treat as cash equivalents all highly-liquid investments with a maturity of 3 months or lesswhen purchased. What amount should Inch report as cash and cash equivalents in its December31, Year4, balance sheet? On September 1, the Consul Company acquired $10,000 face value, 8% bonds of Envoy Corporation at 104. The bonds were dated May 1 and mature in 5 years on April 30, with interest payable each October 31 and April 30. What entry should Consul make to record the purchase of the bonds? Fact Pattern:Grant, Inc., acquired 30% of South Co.’s voting stock for $200,000 on January 2, Year 1, and didnot elect the fair value option. The price equaled the carrying amount and the fair value of the interest purchased in South’s net assets. Grant’s 30% interest in South gave Grant the ability to exercise significant influence over South’s operating and financial policies. During Year 1, Southearned $80,000 and paid dividends of $50,000. South reported earnings of $100,000 for the 6 months ended June 30, Year 2, and $200,000 for the year ended December 31, Year 2. On July 1, Year 2, Grant sold half of its stock in South for $150,000 cash. South paid dividends of $60,000 on October 1, Year 2.Before income taxes, what amount should Grant include in its Year 1 income statement as a result of the investment? Plack Co. purchased 10,000 shares (2% owner ship) of Ty Corp. on February 14 and did not elect the fair value option. Plack received a stock dividend of 2,000 shares on April 30, when the market value per share was $35. Ty paid a cash dividend of $2 per share on December 15. In its income statement for the year, what amount should Plack report as dividend income? Pear Co.’s income statement for the year ended December 31, as prepared by Pear’s controller, reported income before taxes of $125,000. The auditor questioned the following amounts that had been included in income before taxes:
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Equity in earnings of Cinn Co. $ 40,000 Dividends received from Cinn 8,000 Adjustments to profits of prior years for arithmetical errors in depreciation (35,000) Pear owns 40% of Cinn’s common stock, and no acquisition differentials are relevant. Pear’s December 31 income statement should report income before taxes of $152,000 Jay Company acquired a wholly owned foreign subsidiary on January 1. The equity section of the December 31 consolidated balance sheet follows: Common stock $ 500,000 Additional paid-in capital 200,000 Retained earnings 900,000 Accumulated other comprehensive income
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