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11. On October 1, Ryan Company purchased $200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as held-to-maturity securities. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were $700. At what amount should this acquisition of bonds be recorded?

A $196,700

B $196,000

C $202,000

D $202,700

12. Aloe Company reports its income from its investment in Palm Company under the equity method. Aloe recognized income of $125,000 from its investment in Palm during the current year. Palm declared and paid dividends of which Aloe's share was $25,000 during the current year. The effect of these activities on the operating section of the statement of cash flows of Aloe Company prepared for the current year under the indirect method would be

A an increase of $100,000.

B an increase of $125,000.

C a deduction of $100,000.

D a deduction of $125,000.

13. Which of the following is NOT a required disclosure for lessors?

A A general description of the lessor's leasing arrangements

B Unguaranteed residual values accruing to the benefit of the lessor

C Unearned interest revenue

D Total of minimum sublease rentals to be received in the future under noncancelable subleases

14. Wrench Repairs acquires equipment under a noncancelable lease at an annual rental of $45,000, payable in advance for five years. After five years, there is a bargain purchase option of $75,000. The appropriate interest rate is 12 percent. What is the total present value of the lease and the first year's interest expense?

A $204,771 and $21,508

B $224,234 and $21,508

C $204,771 and $19,173

D $224,234 and $26,908

15 Modesto, Inc. leased machinery with a fair value of $250,000 from Layton Machine Co. on December 31, 2014. The contract is a six-year noncancelable lease with an implicit interest rate of 10 percent. The lease requires annual payments of $50,000 beginning December 31, 2014. Modesto appropriately accounted for the lease as a capital lease. Modesto's incremental borrowing rate is 12 percent. Assuming the present value of an annuity due of 1 for 6 years at 10 percent is 4.7908 and the present value of an annuity due of 1 for 6 years at 12 percent is 4.6048, what is the lease liability that Modesto should report on the balance sheet at December 31, 2014?

A $189,540

B $239,540

C $230,240

D $200,000