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Find what is the amount of depreciation expense

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Question 1: On January 1, 2018, OU Company issued 12% bonds with a $20 million face value and a maturity date of December 31, 2019. The market rate is 14%. Coupon payments are due semi-annually and the first coupon payment is due on June 30, 2018. What is the present value of the bond at issuance (i.e., January 1, 2018)?

Question 2: Based on the information in the previous question regarding the issuance of the bond by OU Company, what is the amount of interest expense to be recorded on June 30, 2018?

Question 3: Firm A leases equipment from Firm B for 7 years. Firm A will pay $5,000 at the end of every year for the next 7 years. Assume that the discount rate of Firm A is 8%. Also assume that the lease term and the useful life of the equipment are the same. The present value of the equipment lease payments at the inception of the lease is $26,032. What is the amount of depreciation expense to be recorded by Firm A for the first year of the lease if Firm A uses the straight line depreciation method?

Question 4: Based on the information in the question above regarding the lease by Firm A, what is the amount of ending lease payable at the end of year 1 after the first lease payment?

Reference no: EM132563084

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