Home / Questions / On January 1 2014 Merchant Co sold a tractor to Swanson Inc and simultaneously leased it b...
On January 1, 2014, Merchant Co. sold a tractor to Swanson Inc. and simultaneously leased it back for five years. The tractor’s fair value is $250,000, but its carrying value on Merchant’s books prior to the transaction was $200,000. The tractor has a six-year remaining estimated useful life, and Merchant and Swanson both used 8% interest in evaluating the transaction. Merchant has agreed to make five payments of $57,976 beginning January 1, 2014.
Required:
1. What type of a lease is this for Merchant and why?
2. Compute the amount of Merchant’s gain on the transaction and explain how Merchant will account for it.
3. Prepare the January 1, 2014, entries on Merchant’s books to account for the sale and leaseback.
4. Assume that the tractor’s carrying value on Merchant’s books was $260,000. Explain how Merchant would account for the loss.
Apr 24 2020 View more View Less
Based on the following information, calculate the Economic Order Quantity. Round to 0 decimal points at the end of the problem Prepare the purchase order at the plant ===...
Aug 22 2020In a regression analysis involving 27 observations, the following estimated regression equation was developed.yˆ = 25.2 + 5.5x1For this estimated regression equation SST ...
Apr 19 2020You have a set of data about dropout rates for a local college, and you have already determined that, on average, 305 students drop out per year with a standard deviatio...
Apr 11 2020The Children’s Health Insurance Program (CHIP) provides health coverage for children in families with incomes too high to qualify for Medicaid but whose parents don’t wan...
Dec 16 2019For a perfectly competitive industry, the short-run industry supply curve is determined by a. horizontally summing all the firm's profit-maximizing output levels b. horiz...
Apr 14 2020One of Mei-ling’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and sells muffins and cookies. He is eager to buy one of Me...
Apr 03 2020Discuss what, if any, political activity can be undertaken by a charitable NFP organization. View Solution: Discuss what if any political activity can be undertaken by
Mar 31 2020Which of the following is TRUE?A.A price floor is the minimum price that can be legally charged.B.A shortage results from a binding price floor.C.A surplus results from a...
May 10 2021business analytics (1) You are working in the business analytics team of the main running water supplier of the city. Your current project objective is to build a new dat...
Apr 27 2021Bonds Payable has a balance of $5,000,000 and Discount on Bonds Payable has a balance of $150,000. If the issuing corporation redeems the bonds at 98, is there a gain or ...
May 06 2021