Which of the following is a disclosure that a lessee must make within its financial statements?

A) aggregated lease payments on both capital and operating leases for the next five years
B) the original amounts of debt associated with each lease
C) rent expense for the three year period covered by the income statement
D) the original cost of assets leased under operating leases

Answer: C

Business

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Able Company bought a machine on January 1, 2008 for $80,000. At the time the machine was purchased it was estimated to have an 8-year useful life and a $4,000 salvage value. Able uses straight-line depreciation

During 2014, before the adjusting entry for depreciation was made, Able revised the estimated useful life of the machine to a total of ten years, with an estimated salvage value of $0. How much depreciation expense should the company report for the year ended December 31, 2014? A) $5,000 B) $5,750 C) $4,400 D) $9,500

Business

Effective January 2, 2014, Moldaur Co adopted the accounting principle of expensing advertising and promotion costs as they are incurred. Previously, advertising and promotion costs applicable to future periods were recorded in prepaid expenses. Moldaur can justify the change, which was made for both financial statement and income tax reporting purposes. Moldaur's prepaid advertising and

promotion costs totaled $250,000 at December 31 . 2013 . Assume that the income tax rate is 40 percent for 2013 and 2014 . The adjustment for the effect of the change in accounting principle should result in a net charge against income in the income statement for 2014 of a. $0. b. $100,000. c. $150,000. d. $250,000.

Business