At the beginning of current year, Denver Company sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental. Sale price at fair value: 6,000,000 Carrying amount of equipment: 4,500,000 Annual rental payable at the end of each year: 800,000 Implicit interest rate: 10% Present value of an ordinary annuity of 1 at 10% for four periods: 3.17 What amount should be reported as gain on right transferred to the buyer-lessor? 866,000 0 750,000 634,000 What amount should be reported as annual depreciation of the right of u 634,000 475,500 190,200 253,600
At the beginning of current year, Denver Company sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental. Sale price at fair value: 6,000,000 Carrying amount of equipment: 4,500,000 Annual rental payable at the end of each year: 800,000 Implicit interest rate: 10% Present value of an ordinary annuity of 1 at 10% for four periods: 3.17 What amount should be reported as gain on right transferred to the buyer-lessor? 866,000 0 750,000 634,000 What amount should be reported as annual depreciation of the right of u 634,000 475,500 190,200 253,600
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of current year, Denver Company sold an equipment with remaining life of 10 years and immediately leased it back for 4 years at the prevailing market rental.
Sale price at fair value: 6,000,000
Carrying amount of equipment: 4,500,000
Annual rental payable at the end of each year: 800,000
Implicit interest rate: 10%
Present value of an ordinary annuity of 1 at 10% for four periods: 3.17
What amount should be reported as gain on right transferred to the buyer-lessor?
866,000
0
750,000
634,000
What amount should be reported as annual
634,000
475,500
190,200
253,600
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