131) The lessee in a capital lease capitalizes the asset in its financial statements if they are likely to take legal title to the property.
132) An operating lease is basically any lease that is not a finance lease.
133) For a finance lease, organizations must disclose not only the total minimum lease payments due at the end of the year but also those due within one year, within two to five years and after five years.
134) Under IAS 39 financial liabilities must be measured at amortized cost.
135) Under IAS 39 financial liabilities must be measured at cost.
136) IFRS 7 required organizations to report the fair value of liabilities compared to their carrying amounts.
137) Solvency Limited purchased equipment costing $150,000 on October 1, 2010, by paying 10% down and signing an 8%, 9-month note payable for the balance. Solvency Limited's year end is December 31.
a.Prepare journal entries to record the purchase of the equipment, the accrual of interest on December 31, and the payment of the note at maturity.
b.Determine the balance of any current liabilities associated with the note as of December 31, 2010.
138) Chapter 11 Inc. entered into the following transactions relating to notes payable:
Sept.1 Purchased inventory costing $48,000 by signing an 8-month, 6% note payable.
Nov.1 Purchased inventory costing $30,000 by signing a 1-year, 7% note payable.
a. Prepare journal entries to record the above transactions.
b. Assuming Chapter 11 Inc. has a December 31 year end, prepare any adjusting entries needed for the accrual of interest.
139) Unsecured Ltd. credited the Sales account for $175,600 during the month of August. All sales are for cash. Included in this amount is 5% sales tax required by the federal government for collection of GST. On August 31, Unsecured Ltd. must remit the appropriate amount of sales tax due.
Prepare all entries for May for the above transactions.
140) Explain the accounting process for warranties. Be specific and include in your discussion the principle that governs the accounting method.