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Basic Question 12 of 15
On December 31, 2014, Rosen Corp. sold a machine to Carter and simultaneously leased it back for one year. Pertinent information (on this date) follows:
Carrying amount: $330,000
Present value of reasonable lease rentals ($3,000 for 12 months @ 12%): $34,000
Estimated remaining useful life: 12 years
B. $30,000
C. $0
Sales price: $360,000
Carrying amount: $330,000
Present value of reasonable lease rentals ($3,000 for 12 months @ 12%): $34,000
Estimated remaining useful life: 12 years
In Rosen's December 31, 2014 balance sheet, the profit from the sale of this machine should be ______.
A. $34,000
B. $30,000
C. $0
User Contributed Comments 3
| User | Comment |
|---|---|
| endlessyy | Then what is that $4000 is? unearned interest? |
| Jurrens | it only asks about the sale, not the leasing-back aspect |
| jrojasut09 | the PV of the lease payments become a liability |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
explain the financial reporting of leases from the perspectives of lessors and lessees
CFA® 2024 Level I Curriculum, Volume 2, Module 8.