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QUESTION 1 The Douglas Company leased a machine at the beginning of 2012. The machine, which had cost the lessor $85,000, was properly capitalized by...

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QUESTION 1 The Douglas Company leased a machine at the beginning of 2012. The machine, which had cost the lessor $85,000, was properly capitalized by Douglas at $73,734.84. A lease payment of $12,000 is due at the end of each year. The expected life of the machine is 12 years, and the term of the lease is 10 years. At the beginning of 2019, the machine will be returned to the lessor. Both Douglas and the lessor use the straight- line method of depreciation. What amount of depreciation expense should Douglas record in 2012 for the machine? $7,373. 84 $8,500. 00 $7,300. 00 $6,173. 84 1 points QUESTION 2 A lease will be treated as a direct Fnancing lease by the lessor when: at least one of the four basic criteria is met and the lessor has dealer proFt or loss. the interest revenue element is determined in such a manner as to produce a constant periodic rate of return on the net investment of the lease at least one of the four basic criteria is met, collectibility of the minimum lease payments is reasonably assured, no uncertainties surround the amount of the unreimbursable costs, and the lessor does not have a dealer proFt or loss the lease agreement contains a provision for unguaranteed residual value 1 points QUESTION 3
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Depreciation expense will be recorded on the books of the: lessee for operating leases lessor for operating leases lessor for direct Fnancing leases lessor for sales-type leases 1 points QUESTION 4 If a lease is classiFed as a capital lease because the present value of the minimum lease payments is equal to 90% or more of the fair value of the leased property, the time period to be used by the lessee to amortize the leased property is the: lease term expected economic life of the property lease term or the expected economic life of the property, whichever is longer expected economic life of the property or 40 years, whichever is shorter 1 points QUESTION 5 If a noncancelable lease contains a bargain purchase option and the lessee is expected to be able to pay all future rents and the lessor is unsure of the amount of unreimbursable costs during the lease term, the lessee and lessor should classify the lease as follows: ............................ Lessee. ............. Lessor ...... operating. ................ o perating ....operating. ............... capi tal ..... capital. ....................
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QUESTION 1 The Douglas Company leased a machine at the beginning of 2012.
The machine, which had cost the lessor $85,000, was properly
capitalized by Douglas at $73,734.84. A lease payment of...

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