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True [87]
3 years ago
15

A comparison between Operating Lease and Capital Lease Now assume that Company ABC leases an equipment for 5 years instead. Othe

r information mostly remains the same (except for highlighted texts) Leased assets have an expected life of 5 years Depreciation is straight line Annual lease payment is $2,505. *Interest rate is 8%. the ownership of the property goes back to the lessor at the end of the lease term Lease payments are made at beginning of each year *the present value of the lease payment is 10,000 (Present value of 2,505 ordinary annuity for 5 years at 8%) Fair value of the equipment is 10,000 The lease does not contain a bargain purchase option a. Determining type of lease. lease transfers ownership of property to lessee by end of the lease term (ii) lease contains an option to purchase the property at a bargain price (iii) lease term is 75% or more of estimated economic life of the property v) the present value of rentals and other minimum lease payments at beginning of lease term is 90% or more of the fair value of leased property Which of the above criteria is met? Correct Correct Correct Correct Based on your answers above, what type of lease is this? Correct (ii) NO ii) YES (iv) YES Capital lease b. To record the type of lease indicated above, multiple journal entries are required 1) To record the initiation of the lease, an lease asset and a lease obligation is recorded on the book at the fair value of the equipment Dr: asset Correct 10000 Correct Cr: Lease liability Correct 10000 Correct 2) At the end of year 1, the following two journal entries are recorded First, as the lessee recorded the "leased asset" on the balance sheet, it is necessary to depreciate this asset. To record the depreciation expense using the straight-line depreciation method To record the depreciation expense using the straight-line depreciation method (over a 5-year period, no residual value), the company records the following JE Dr: eciation expense 2000 Correct Correct Accumulated Dr Correct Cr: 2000 Correct Second, at the time the lessee makes cosh payment of $2505, a portion of that is considered payment of interest expense (coiculoted os principle times interest rotel the rest is considered repoyment ot principle (this is exactly like when you pay a mortgage on a car or a house) the following journal entry is he recorded inter est expense Lease liability Correct Correct Cash enter amount enter amount Correct 2505 Correct

Business
1 answer:
damaskus [11]3 years ago
8 0

Answer

The answer and procedures of the exercise are attached in the following archives.

Explanation  

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

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The list provided by the International Trade Administration to a potential exporter with the names and addresses of potential di
Marta_Voda [28]

Answer: Best prospects list

Explanation: The best prospects list is usually issued to potential exporters by the International Trade Organization which serves functions such as facilitating trade operations between countries by eliminating several trading issues such as negotiating and reducing trade tariff, regulating restrictive policies and also providing useful information necessary for successful trading to traders.

The provision of best prospects list offers firsthand information to potential traders about available and certified markets and distributor information which could facilitate ease of trading.

4 0
3 years ago
Three commonly used productivity variables​ are: A. ​quality, efficiency, and low cost. B. ​technology, raw​ materials, and labo
exis [7]

Answer:

E. Labor, capital and management

Explanation:

Productivity refers to efficiency in production which means how much output is produced for available level of inputs. It is measured by output/input ratio.

The variables which determine productivity are labor, capital and management.

Capital refers to the amount of investment an entrepreneur makes in a project. Capital invested determines the resources available.

Labor refers to men employed to produce output. Labor cost refers to the wages paid.

Management refers to carrying out operations effectively so that all factors of production work in synchronization and to ensure that everything is in order.

8 0
3 years ago
LRQ Inc. issued bonds on April 18, 2006. The bonds had a coupon rate of 5.5%, with interest paid semiannually. The face value of
ankoles [38]

Answer:

$857

Explanation:

Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Both of these cash flows discounted and added to calculate the value of the bond.

According to given data

Face value of the bond is $1,000

Coupon payment = C = $1,000 x 5.5% = $55 annually = $27.5 semiannually

Number of periods = n = (April 18, 2036 - April 18, 2020) years x 2 = 16 x 2 period = 32 periods

Market Rate = 7% annually = 3.5% semiannually

Price of the bond is calculated by following formula:

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Price of the Bond = 27.5 x [ ( 1 - ( 1 + 3.5% )^-32 ) / 3.5% ] + [ $1,000 / ( 1 + 3.5% )^32 ]

Price of the Bond = $524.29 + $332.59 = $856.98 = $857

8 0
3 years ago
Auditors-Are-Us LLC, audited the financial statements of LINKCO Industries, a private company, for the year ended December 31, 2
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4 0
3 years ago
Should I get a small dog I mean I always wanted you be but then I wouldn’t be able to go out of town
eduard

Answer:

okay

Explanation:

3 0
3 years ago
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