$4$

$11.$ On January $1,2025,$ Crane Corporation signed a five$-$year non$-$cancelable lease for equipment. The terms of the lease called for Crane to make annual payment of $$200,000$ at the beginning of each year for $5$ years. The equipment will revert to the lessor at the end of the lease. The equipment has an estimated useful life of $7$ years. Crane uses the straight line amortization method when allowed. This lease meets one of the tests and is a finance lease. The minimum lease payments were determined to have a present value of $$833,974$ at an effective interest rate of $10\%.$ With respect to this capitalized lease Crane should record the following at the end of $2025,$ the first year of the lease?

a$.$ Interest expense $$63,397$ and Amortization expense $$166,795$

b$.$ Interest expense $$83,397$ and Amortization expense $$119,139$

c$.$ Lease Expense $$166,795$

d$.$ Lease Expense $$119,149$

e$.$ Lease Expense $$200,000$

$12.$ Refer to the lease discussed in the above problem. If it was determined that the lease was an operating lease Crane should record the following at the end of $2025,$ the first year of the lease?

a$.$ Interest expense $$63,397$ and Amortization expense $$166,795$

b$.$ Interest expense $$83,397$ and Amortization expense $$119,139$

c$.$ Lease Expense $$166,795$

d$.$ Lease Expense $$119,149$

e$.$ Lease Expense $$200,000$

$13.$ A lessee has signed a $10$ year lease on property that has an economic life of $12$ years. The lessee agrees to pay $$10,000$ per year, payable on the first day of each year to the lessor. There is an unguaranteed residual of $$4,000$ on the property. This lease qualifies as a finance lease. The interest rate in the lease is $5\%$ and is known by all parties. On the inception day of the lease how much should be credited to the "Lease Liability" account?

a$.$ $$83,534$

b$.$ $$81,078$

c$.$ $$86,603$

d$.$ $$104,000$

$14.$ Reich, Inc. sold newly issued bonds with a maturity of $$200,000$ and a maturity of ten year from the date of issue. If the bonds were issued at a premium, this indicates that

a$.$ the market and stated interest rates were the same.

b$.$ the market rate of interest exceeded the stated rate on the sale date.

c$.$ the stated rate of interest exceeded the market rate on the sale date.

d$.$ Not determinable from the information given.