#9 Bond Corporation purchased a machine on January 1, 2016 for $1,500,000 with a
ID: 2566472 • Letter: #
Question
#9 Bond Corporation purchased a machine on January 1, 2016 for $1,500,000 with an expected life of 10 years for the date of purchase. There is no residual value, and it is to be depreciated on a straight-line basis. On January 1, 2016, Raza Company leased the machine from Bond Corp for 3 years at a monthly rate of $32,000 In addition, Raza paid a lease bonus of $75,000. 1) What is the amount of income on this operating lease, should Bond Corp (lessor) report for the year ended December 31, 2016? 2) What is the amount of expense on this operating lease, should Raza Corp (lessee) report for the year ended December 31, 2016?Explanation / Answer
1) Amount of Income on this operating lease, Bond corp(lessor) should report for the year ended 31, 2016 =
75,000 + (32000*12) = $459,000
2) Amount of expense on this operating lease, Raza corp(lessor) should report for the year ended 31, 2016 =
(75000/3) + (32000*12) = $409,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.