Active TopicsActive Topics  Display List of Forum MembersMemberlist  Search The ForumSearch  HelpHelp
  RegisterRegister  LoginLogin
FAR STUDY GROUP
 CPAnet Forum : FAR STUDY GROUP
Subject Topic: leases (Topic Closed Topic Closed) Post ReplyPost New Topic
  
Author
Message << Prev Topic | Next Topic >>
to_be_cpa
Newbie
Newbie


Joined: 23 Jun 2009
Location: United States
Online Status: Offline
Posts: 34
Posted: 07 May 2010 at 15:53 | IP Logged  

The following information pertains to a sale and leaseback

of equipment by Mega Co. on December 31, 2003:

Sales price $400,000

Carrying amount $300,000

Monthly lease payment $3,250

Present value of lease payments $36,900

Estimated remaining life 25 years

Lease term 1 year

Implicit rate 12%

What amount of deferred gain on the sale should Mega report

at December 31, 2003?

a. $0

b. $ 36,900

c. $ 63,100

d. $100,000

 

Can anyone answer to this questionalong with explaination?

I believe, minor portion of asset right has been retained n hence no deferral of gain(entire gain has to be recognized in full immediately)...n hence answer zero.....but answer to this is $100000.

Kindly help!!!

Back to Top View to_be_cpa's Profile Search for other posts by to_be_cpa
 
CPAhamster
Contributor
Contributor


Joined: 24 Oct 2009
Location: United States
Online Status: Offline
Posts: 52
Posted: 07 May 2010 at 16:24 | IP Logged  

The PV of lease payment is less than 10% of FMV of lease back property. As a result, a full gain of 100,000 is recognized, none is deferred.

The answer is A (zero)
Back to Top View CPAhamster's Profile Search for other posts by CPAhamster
 
to_be_cpa
Newbie
Newbie


Joined: 23 Jun 2009
Location: United States
Online Status: Offline
Posts: 34
Posted: 07 May 2010 at 16:26 | IP Logged  

thanx cpahamster...
Back to Top View to_be_cpa's Profile Search for other posts by to_be_cpa
 



Sorry, you can NOT post a reply.
This topic is closed.


  Post ReplyPost New Topic
Printable version Printable version

Forum Jump
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum

Powered by Web Wiz Forums version 7.9
Copyright ©2001-2010 Web Wiz Guide

This page was generated in 0.0938 seconds.

Copyright 1996-2016 CPAnet/MizWeb Communities All Rights Reserved
Twitter
|Facebook |CPA Exam Club | About | Contact | Newsletter | Advertise & Promote