15. Midland Company follows GAAP for its external financial reporting whereas Bailey Company follows IFRS for its external financial reporting. The amount contributed by Midland for its defined contribution plan for 2018 amounted to $55,000 and the amount contributed by Bailey for its defined contribution plan for 2018 amounted to $76,000. The remaining service lives of employees at both firms is estimated to be 10 years. What is the amount of expense related to pension costs recognized by each company in its income statement for the year ended December 31, 2018 Midland Bailey A) 5,500 S55,000 $55,000 $76,000 $76,000 S 7,600 7,600 C) D) s 5,500 While only certain leases are currently accounted for as a sale or purchase, there is theoretical A) 16. justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that B) C) D) all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal. at the end of the lease the property usually can be purchased by the lessee. a lease reflects the purchase or sale of a quantifiable right to the use of property. during the life of the lease the lessee can effectively treat the property as if it were owned. 17. The primary difference between a direct-financing lease and a sales-type lease is the A) B) C) D) manner in which rental receipts are recorded as rental income. amount of the depreciation recorded each year by the lessor. recognition of the manufacturer's or dealer's profit at (or loss) the inception of the lease. allocation of initial direct costs by the lessor to periods benefited by the lease arrangements. 18. On January 1, 2018, Dean Corporation signed a ten-year noncancelable lease for certain machinery. The terms of the lease called for Dean to make annual payments of $220,000 at the end of each year for ten years with the title passing to Dean at the end of this period. The machinery has an estimated useful life of 15 years and no salvage value. Dean uses the straight-line method of depreciation for all of its fixed assets. Dean accordingly accounted for this lease transaction as a capital lease. The lease payments were determined to have a present value of $1,342,016 at an effective interest rate of 8%. With respect to this capitalized lease, Dean should record for 2018 A) lease expense of $200,000. B) interest expense of $89,468 and depreciation expense of $76,136. C) interest expense of S107,361 and depreciation expense of $89,468. D) interest expense of $91,363 and depreciation expense of $134,202