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Sphinxa [80]
3 years ago
7

Carla VistaInc. leased a new crane to Martinez Construction under a 5-year, non-cancelable contract starting January 1, 2020. Te

rms of the lease require payments of $45,500 each January 1, starting January 1, 2020. The crane has an estimated life of 7 years, a fair value of $220,000, and a cost to Carla Vista of $220,000. The estimated fair value of the crane is expected to be $45,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Both Carla Vista and Martinez adjust and close books annually at December 31. Collectibility of the lease payments is probable. Martinez’s incremental borrowing rate is 8%, and Carla Vista’s implicit interest rate of 8% is known to Martinez.
Required:
a. Identify the type of lease involved and give reasons for your classification. Discuss the accounting treatment that should be applied by both the lessee and the lessor.
b. Prepare all the entries related to the lease contract and leased asset for the year 2020 for the lessee and lessor, assuming the following amounts:

1. Insurance $500.
2. Taxes $2,000.
3. Maintenance $650.
4. Straight-line depreciation and salvage value $15,000.

c. Discuss what should be presented in the balance sheet, the income statement, and the related notes of both the lessee and the lessor at December 31, 2020.
Business
1 answer:
Marrrta [24]3 years ago
4 0

Answer:

Lessee's Entries:

Rent expense (Dr.) $45,500

Cash (Cr.) $45,500

Lessor's Entries:

1. Property Tax expense (Dr.) $2,000

Maintenance and Repair Expense (Dr.) $650

Insurance Expense (Dr.) $500

Accounts Payable (Cr.) $3,150

2. Depreciation Expense (Dr.) $ 29,285

Accumulated  Depreciation (Cr.) $29,285

3.Cash (Dr.) $45,500

Rent Revenue (Cr.) $45,500

Explanation:

The lease is considered as an operating lease as it does not have bargain purchase option and renewal options. The property ownership is not transferred in this lease.

Depreciation expense:

[ Cost - Salvage Value ] / 7

220,000 - 15000 / 7

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Surveys are an especially effective source of support for topics related to the attitudes, values, and beliefs of the people A.
Elena L [17]

Answer:

Option "A" is the correct answer to the following statement.

Explanation:

In the modern era, everyone relates himself with surveys reports easily, If a speaker uses survey reports during his lectures every individual attracts numerical provided data. this will create a suitable environment for the speaker.

In an immediate environment, the speaker tries to attract individuals by providing them survey reports which authorized his opinion.

8 0
3 years ago
company manufactures pillows. the operating budget was based on production of ​pillows, with ​machine-hours allowed per pillow.
MatroZZZ [7]

a. The budgeted variable overhead is $468,750.

b. The variable overhead spending variance is $38,100 Favorable

c. The variable overhead efficiency variance is $30,000 Favorable

<h3>What is variable overhead?</h3>

Variable overhead is a cost of running a business that varies with operational activity. Variable overheads rise and fall in lockstep with production output. Overheads, such as administrative overhead, are often a set cost.

The variable manufacturing overhead controllable variance reflects how effectively the company stuck to its budget. The difference between the planned fixed overhead at normal capacity and the standard fixed overhead for the actual units produced is the fixed factory overhead volume variance.

a. The budgeted variable overhead for 2017 = Budgeted hours * Variable overhead rate per hour

= (25000*0.75)*$25 = $468,750

b. Variable overhead spending variance = (SR - AR) * AH = ($25 - $23) * 19050 = $38,100 Favorable

c. Variable overhead efficiency variance = (SH - AH) * SR = (27000*0.75 - 19050) * $25 = $30,000 Favorable

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4 0
1 year ago
If the interest rate rises in the United States relative to other​ nations, then in the foreign exchange market the demand for d
34kurt

Answer:

B. ​increases; decreases

Explanation:

Foreign exchange market can be defined as type of market in which the currency of one country is converted into that of another country.

For example, the conversion of dollars of the United States of America can be converted into naira (Nigeria) at the foreign exchange market.

Efficient market school is the market school which argues that forward exchange rates do the best possible job for forecasting future spot exchange rates, so investing in exchange rate forecasting services would be a waste of time because it is impossible to have a consistent alpha generation on a risk adjusted excess returns basis as market prices are only affected by new informations.

The efficient market school also known as the efficient market hypothesis (EMH) is a hypothesis that states that asset (share) prices reflect all information and it is very much impossible to consistently beat the market.

Also, forward exchange rates are exchange rates controlling foreign exchange transactions at a specific future date or time.

An interest rate can be defined as an amount of money that is charged as a percentage of the total amount borrowed from an individual or a financial institution.

Generally, if the interest rate rises in the United States relative to other​ nations, then in the foreign exchange market the demand for dollars​ increases and the supply of dollars​ decreases because of the high value of the dollar compared to the other currency.

4 0
2 years ago
Read 2 more answers
On-line Text Co. has four new text publishing products that it must decide on publishing to expand its services. The firm's WACC
dem82 [27]

Answer:

C. Reject W

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) which is shown below:

Expected return = Risk-free rate of return + Beta × (Market rate -  Risk-free rate of return)

= 7% + 1.6 × (12%-7%)

= 7% + 1.6 × 5%

= 7% + 8%

= 15%

The Project W should be rejected as it gives only 14% expected return which is less than the derived expected return.

3 0
3 years ago
Who do i write the check to for speeding ticket?
uysha [10]
The court which you were sentenced to go to. thats where i wrote mine to
4 0
3 years ago
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