20.On January 1, 2010, Foster Corporation issued a 2-year, non-interest-bearing, $4,000 note payable. Interest is payable each December 31 during the life of the note. When the note was issued, the market rate of interest was 6%. Complete the following amortization schedule:
Date
|
Interest Expense
|
Cash Payment
|
Balance Sheet Value
|
1/1/10
|
|
|
|
12/31/10
|
|
|
|
12/31/11
|
|
|
|
21.On January 1, 2009, Parker Company leased equipment under a 3-year lease with payments of $5,000 on each December 31 of the lease term. The present value of the lease payments at a discount rate of 12% is $12,010. If the lease is considered a capital lease, depreciation expense (straight-line) and interest expense are recognized. If the lease is considered an operating lease, then rent expense is recognized. What is the difference in the total combinednet incomes of 2009, 2010, and 2011, if the lease is considered a capital lease instead of an operating lease?
22.On January 1, 2009, Action Corporation issued a two-year, 5%, $1,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on January 1, 2009 is 3%. Calculate the present value of the bond issued by Action on January 1, 2009.
23.On January 1, 2009, Alcon Corporation issued a 5-year, 10%, $10,000 bond payable. Beginning in 2010, interest is payable every January 1 over the life of the bond. The market rate of interest on the issue date is 10%. Calculate the interest expense for 2009 using the effective interest method.
24.On January 1, 2009, Mega Company leased equipment under a 5-year lease with payments of $7,000 on each December 31 of the lease term. The present value of the lease payments at a discount rate of 9% is $27,230. The lease is considered a capital lease.
A.Determine the amount of the leased asset and lease obligation on January 1, 2009.
B.Why are some leases accounted for as purchases by the lessee?