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On 1/1/16, Ship leased office space to Share for 10 years at $15,000 per month. Depreciation is $12,000 per year straight line. Shore's rental expense for 2016 is a. $180,000 b. $192,000 c. $222,000 d. $195,000 On 7/1/14, Petry Co. leased equipment to Dish Co. for 10 years (the useful life of the asset). Petry had purchased the equipment for $5, 200,000 and it has a list selling price of $7, 200,000. Annual payments of $828,000 begin on 7/1/14. Assume that the present value of these payments at 8% is $6,000,000. If this is a sales type lease, what amount of gross profit should Petry record for year ended 12/31/14? a. $0 b. $800,000 c. $1, 200,000 d. $1, 080,000 Use the following information for the next 2 questions: Most Co as a lessee records a capital lease of machinery on 1/1/14. The 7 annual lease payments of $210,000 are made at the of each year. The present value of the lease payments at 10% is $1, 022, 400. Most uses straight line depreciation. The life of the machine is 8 years (no residual value). At the end of the lease, Most must return the machine to the lessor. The reduction of the lease liability at 12/31/14 is a. $222,000 b. $210,000 c. $119, 760 d. $107, 760 e. $102, 240 What journal entry must Most make to record the return of the leased machine upon the expiry of lease. a. Depreciation expense $146, 057 Accumulated depreciation $146, 057 b. Depreciation expense $127, 800 Accumulated depreciation $127, 800 C. Accumulated depreciation $1, 022, 400 Leased machine $1, 022, 400 d. Lease liability $1, 022, 400 Leased machine $1, 022, 400 e. No journal entry

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