1323 Words6 Pages

Lease problems:
Homework 1 – due Tu March 6, 2012
Problem 2
On January 1, Year 1, Burton Company leases equipment from Nelson Company for an annual lease rental of $10,000. The lease term is five years and the lessor’s interest rate implicit in the lease is 8%. The lessee’s incremental borrowing rate is 8.25%. The useful life o the equipment is five years, and its estimated residual value equals its removal cost. Annuity tables indicate that the present value of an annual lease rental of $1 (at 8% rate) is $3.993 (three dollars and 99.3 cents). The fair value of leased equipment equals the present value of the rentals. Assume the lease is capitalized. • Prepare accounting entries required by Burton for Year 1. • Compute and illustrate the effect on the income statement for the year ended Dec 31, Year 1, and for the balance sheet as of Dec. 31, Year 1. • Construct a table showing payments of interest and principal made every year for the five year lease term • Construct a table showing expenses charged tot eh income statement for the five year lease term if the equipment is leased. Show a column for amortization, interest and total expenses. • Discuss the income and cash flow implications from this capital lease.
Problem 2
On January 1, Borman Company, a lessee, entered into three non-cancellable leases for new equipment identified as J, K and L. None of the three leases transfers ownership of the equipment to Borman at the end of the lease term. For each of the three leases, the present value at the beginning of the lease term of the minimum lease payments excluding that portion of the payments representing executor costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, is 75% of the excess of the fair value of the equipment to the lessor at the inception of the lease over any related investment

Related

## Acct 311 Case Study

2449 Words | 10 PagesA company leases a machine on January 1, Year One for five years which call for annual payments of $4,000 for the first year and then $10,000 per year after that. The present value of these payments based on a reasonable interest rate of 10 percent is assumed to be $38,000. This lease

## Acc 551 Midterm Exam Paper

1196 Words | 5 PagesQuestion: : (TCO D) A company issues $5,000,000, 7.8/%, 20-year bonds to yield 8% on January 1, 2010. Interest is paid on December 31. The proceeds from the bonds are $4,901,036. Using effective-interest amortization, how much interest expense will be recognized in 2010? 15.

## Fin 540 Quiz

956 Words | 4 PagesThe parent receives annual dividends from the subsidiary of $2,500,000. If the parent's marginal tax rate is 34% and if the exclusion on intercompany dividends is 70%, what is the effective tax rate on the intercompany dividends, and how much net dividends are received? Question 20 New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market.

## Advantages And Disadvantages Of Graded Unit 2 Management Accounting

2633 Words | 11 PagesThis figure is substrated from the acquisition giving a result of £332,641 which is the written down value. The capital allowance for the first year is £66,528 which is shown in appendix 9 Corporation tax worked out at the main rate of 21% from 1st of April of 2011 (Reference 7). The profit substrates the capital allowance and gives the taxable profit for the next year which is shown in appendix

## Chapter 5 Tax Byrd and Chen

659 Words | 3 PagesHe negotiated a new lease on the warehouse with his landlord; the lease has a term of 5 years with two options to renew each for an additional 5 years. The lease period commenced on March 14, 2013. Cost of the leasehold improvements was $88,000. The cost of leasehold improvements is included in class 13. The capital cost is amortized over the initial lease term plus the first option period under Schedule III.

## Case 78 Essay

2294 Words | 10 Pages2. The Wall Street Journal (WSJ) lists the current price of James River common stock at $27.00. a. Based on this information, the ValueLine 1995 expected dividend, and the annual rate of dividend change for the growth estimate, what is the company’s return on common stock using the constant growth model? What is the expected dividend yield and expected capital gains yield?

## Payroll Quiz

1509 Words | 7 Pages(1) Prepare the journal entry to record (accrue) the employer's payroll for May. (2) Prepare the journal entry to pay for the May payroll. The federal and state unemployment tax rates are 0.8% and 5.4%, respectively, on the first $7,000 paid

## Acc 280 Executive Summary

1804 Words | 8 Pages• What amount of accounts payable did the company have at the end of its 2 most recent annual reporting periods? Accounts payable are the obligation the organization has to its creditors. Any money that is owed, invoices, bills, and statements that are owed to by outside contractors are accounts payable. In June 11, 2011, the accounts payable amounts for PepsiCo were 3,865.00. In March 19, 2011 the accounts payable were 2,881.00.

## Acc/275 Final Paper

2932 Words | 12 Pages$24,000 increase D. $11,000 decrease 45. Hylow Corporation sells its product for $12 per unit. Next year, fixed expenses are expected to be $400,000 and variable expenses are expected to be $8 per unit. How many units must the company sell to generate net operating income of $80,000? A.

## Social Security Pension System: True Or False Questions

1491 Words | 6 Pages5. In the year prior to retirement, a worker earned $20,000 and paid $5,000 in taxes on those earnings. His annual Social Security pension is $10,000 per year. Then it follows

### Acct 311 Case Study

2449 Words | 10 Pages### Acc 551 Midterm Exam Paper

1196 Words | 5 Pages### Fin 540 Quiz

956 Words | 4 Pages### Advantages And Disadvantages Of Graded Unit 2 Management Accounting

2633 Words | 11 Pages### Chapter 5 Tax Byrd and Chen

659 Words | 3 Pages### Case 78 Essay

2294 Words | 10 Pages### Payroll Quiz

1509 Words | 7 Pages### Acc 280 Executive Summary

1804 Words | 8 Pages### Acc/275 Final Paper

2932 Words | 12 Pages### Social Security Pension System: True Or False Questions

1491 Words | 6 Pages