Use the Following Information for Questions

question 62

Multiple Choice

Use the following information for questions.
Metro Company, a dealer in machinery and equipment, leased equipment to Sands, Inc., on
July 1, 2011.The lease is appropriately accounted for as a sale by Metro and as a purchase by Sands.The lease is for a 10-year period (the useful life of the asset) expiring June 30, 2021.The first of 10 equal annual payments of $621,000 was made on July 1, 2011.Metro had purchased the equipment for $3,900,000 on January 1, 2011, and established a list selling price of $5,400,000 on the equipment.Assume that the present value at July 1, 2011, of the rent payments over the lease term discounted at 8% (the appropriate interest rate) was $4,500,000.
-What is the amount of profit on the sale and the amount of interest income that Metro should record for the year ended December 31, 2011?

• A)$0 and $155,160
• B)$600,000 and $155,160
• C)$600,000 and $180,000
• D)$900,000 and $360,000

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Definitions:

Self-Mutilation

The act of deliberately harming one's own body without suicidal intent, often as a coping mechanism for emotional distress.

Impulsive

The tendency to act on a whim, displaying behavior characterized by little or no forethought, reflection, or consideration of the consequences.

Narcissistic Personality Disorder

A mental condition characterized by a long-term pattern of exaggerated self-importance, a need for excessive attention, and a lack of empathy for others.

Assessment Findings

Outcomes or conclusions derived from systematically evaluating information, typically in a professional setting like healthcare or education.