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stira [4]
2 years ago
8

On January 1, Year 1, Michael sold a property with a remaining useful life of 20 years to Wei Co. for $800,000. On the same date

, Michael leased back the property from Wei for 18 years. The lease was properly classified by Michael as a finance lease. Michael is not sure how to recognize the $800,000 received from Wei Co. on January 1, Year 1.
Required:
Which section of the Accounting Standards Codification best helps Michael Co. determine how the initial proceeds of $800,000 received from Wei Co. (buyer-lessor) are recognized?
Business
1 answer:
dezoksy [38]2 years ago
5 0

Answer:

The section of the Accounting Standards Codification that best helps Michael Co. to determine how the initial proceeds of $800,000 received from Wei Co. (buyer-lessor) are recognized is:

ASC 606.

Explanation:

This section that will help Michael Co. to determine if the transaction qualifies as a sale, which is treated under ASC 606, Revenues from Contracts with Customers.  Thereafter, the lease classification criteria in ASC 842 are evaluated.  After the evaluation, if none of the criteria from ASC 842 are met to account for the lease as a finance or capital lease, the seller-lessee would classify the lease as an operating lease.  This implies that the transaction qualifies as a sale and leaseback transaction.

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Answer:

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3.

Required rate = risk free rate + beta (market rate – risk free rate)

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= 0.0525 + 0.06627

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The Consumer Price Index (CPI) is best used to determine
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While many rivals want to reach as many clients as possible with their sales, a focus approach chooses one or more certain categories. It gains an advantage by providing that sector with either high quality or low cost. These actions may improve client loyalty.

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1 year ago
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Answer:

Explanation:

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