On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1,…
On January 1, 2024, Taco King leased retail space from Fogelman Properties. The 10-year finance lease requires quarterly variable lease payments equal to 3% of Taco King’s sales revenue, with a quarterly sales minimum of $570,000. Payments at the beginning of each quarter are based on previous quarter sales. During the previous five-year period, Taco…
On January 1, 2022, Alfa Corporation (the Company) purchased 55 percent of the outstandingvoting stock of Delta Corporation (the Target) for a total purchase price of $3,000,000, which waspaid in cash. The Company correctly recorded the investment as follows: Target’s final adjusted trial balance, as of December 31, 2021, is as follows: Required Prepare the…
On January 1, 20X0, Sharp Corp. granted an employee an option to purchase 10,000 shares of Sharp’s $5 par value common stock at $40 per share. The Black-Scholes option pricing model determines total compensation expense to be $50,000. The option became exercisable on December 31, 20X1, after the employee completed two years of service. The…
On January 1, 20X8, Pace Company acquired all of the outstanding stock of Spin PLC, a BritishCompany, for $350,000. Spin’s net assets on the date of acquisition were 250,000 pounds (£). OnJanuary 1, 20X8, the book and fair values of the Spin’s identifiable assets and liabilitiesapproximated their fair values except for property, plant, and equipment…
On January 1, 20X7, Pepper Company acquired 90 percent of the outstanding common stock ofSalt Corporation for $1,242,000. On that date, the fair value of noncontrolling interest was equalto $138,000. The entire differential was related to land held by Salt. At the date of acquisition,Salt had common stock outstanding of $520,000, additional paid-in capital of…
On January 1, 2016, the Paster Company purchased a machine for $36,000 that had a ten-year estimated useful life and no estimated salvage value. At the start of the seventh year of use, a new energy saving device was added to the machine that extended its original useful life an additional two years. This change…
On January 1, 2018, a machine was purchased for $122,500. The machine has an estimated salvage value of $7,300 and an estimated useful life of 5 years. The machine can operate for 120,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as follows: 2018,…
On January 1, 2021, an investor company acquired 25% of an investee company’s common stock for $720,000. As a result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2021 and 2022 the investee reported $144,000 of net income and $60,000 of dividends. On January 1,…
