***PLEASE SHOW WORK AND HOW DECIDED ON ANSWE, PLEASE IGNORE SHADED BUBBLE AS THESE ARE GUESSES**
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Check my work Flimm Company leases an asset over its estimated useful life of six years. At the inception of the lease, the present value of the lease payments is $240,000. The market value of the leased asset is $258,000. Flimm's journal entry to recognize the inception of the lease includes a debit to Multiple Choice Right-to-use assets for $258,000 Equipment for $240,000 Right-to-use asset for $240,000 Equipment for $258,000 Consistent with ASC Topic 842, if a company sells an asset for a profit of $175,000 and immediately leases back, the gain is recognized Multiple Choice over the life of the lease in proportion to the rental payment. over the life of the lease using the same rate and life used to amortize the leased asset. immediately as an ordinary gain, assuming that criteria are met consist with ASC Topic 606. immediately as a gain to include in discontinued operations. Ford signs a non-cancelable 8-year equipment lease with Ray. The lease has an implicit rate of return of 10% to Ray, the lessor. This rate is known to Ford. Ray's incremental borrowing rate is 8.5%. Ford has a 9% incremental borrowing rate. Ray believes that the equipment has a 10-year service life but has reason to suspect that a major overhaul might be required in the fifth to seventh year. Since this is the first year of the equipment's production, Ray warrants equipment for eight full years anyway. On Ray's books, this lease is treated as a(n): Multiple Choice sales type capital lease. operating lease. O short-term lease. finance capital lease. Check my work Flimm Company leases an asset over its estimated useful life of six years. At the inception of the lease, the present value of the lease payments is $240,000. The market value of the leased asset is $258,000. Flimm's journal entry to recognize the inception of the lease includes a debit to Multiple Choice Right-to-use assets for $258,000 Equipment for $240,000 Right-to-use asset for $240,000 Equipment for $258,000 Consistent with ASC Topic 842, if a company sells an asset for a profit of $175,000 and immediately leases back, the gain is recognized Multiple Choice over the life of the lease in proportion to the rental payment. over the life of the lease using the same rate and life used to amortize the leased asset. immediately as an ordinary gain, assuming that criteria are met consist with ASC Topic 606. immediately as a gain to include in discontinued operations. Ford signs a non-cancelable 8-year equipment lease with Ray. The lease has an implicit rate of return of 10% to Ray, the lessor. This rate is known to Ford. Ray's incremental borrowing rate is 8.5%. Ford has a 9% incremental borrowing rate. Ray believes that the equipment has a 10-year service life but has reason to suspect that a major overhaul might be required in the fifth to seventh year. Since this is the first year of the equipment's production, Ray warrants equipment for eight full years anyway. On Ray's books, this lease is treated as a(n): Multiple Choice sales type capital lease. operating lease. O short-term lease. finance capital lease
