Question

please the three questions below kindly

Topic: L04 154, RST leased equipment from MNO to be used in its warehouse. The lease term is five years. RST spent $5,000 for ordinary repairs during the second year of the lease. RST should: A) expense the $5,000 immediately. B) write the $5,000 off at the end of the lease term. C) capitalize the $5,000 permanently in the lease account. D) amortize the $5,000 over the life of the lease on a reasonable basis. Ans: A Difficulty: Medium Level of Learning: Knowledge Topic: LO1, 2, 3

Answer 1

Hi

Answer is highlighted in yellow: All are individual questions, although all have been answered: Solution: Answer: 154) A) Expense the 5000 immediately Explanation: Because, expenses was incurred for ordinary repairs, as per GAAP, ordinary repair expenses are expensed off during the period instead of capitalization. 163) B) $0 Present value of lease using discount table: (6000*2.40183) = (4000) * (4.11141-2.40183) = Present value of lease Interest income of first year (21249.3*12%) $ $ $ $ 14,411 6,838 21,249 2,550 165) D)50,166 Net lease receivable is generally Market value of lease $ 50,000