1. A company purchased equipment for $100,000 that is expected to have a useful life of 10 years and no salvage value. The company sold the equipment at the end of the third year of its useful life, at which point it had fair market value of $75,000. If the asset was sold for $70,000 and was being depreciated using the straight line method as was reported at book value, what amount of gain or loss would be reported at the time of the sale?

2. If a lessee enters into a finance lease rather than an operating lease, it can expect to have a:

higher debt-to-equity ratio.

higher return on assets.

lower debt-to-equity ratio.