Answer: 6.49%
Explanation:
The constant rate of growth where the company would break even will be calculated thus:
Initial investment = Net cash inflow / (14% - g)
759000 = 57,000/(0.14 - g)
where g = growth rate
759000 = 57,000/(0.14 - g)
Cross multiply
759000(0.14 - g) = 57000
106260 - 759000g = 57000
759000g = 106260 - 57000
759000g = 49260
g = 49260/759000.
g = 0.0649
g = 6.49%
Complete question:
On January 1. Year 1. White Co. sold a property with a remaining useful life of 20 years to Blue Co. for $900.000. At the same time. White entered into a contract with Blue for the right to use the property (leaseback) for a period of 6 years. with annual rental payments of 580.000 that approximate the market rental payments for similar properties. On January 1. Year 1. the carrying amount of the property was 5680.000. and its fair value was 5770.000. A discount rate for the lease of 10% is used by both White and Blue. The present value factor for an ordinary annuity at 10% for 6 periods is 4.3553. The lease does not transfer the property to White at the end of the lease term and does not include a purchase option.
What amount of lease expense for the right of use of the property is recognised by White in Year 1 ?
A. $0
B. $130,000
C. $90,000
D. $220,000
Answer:
$90,000 amount of lease expense for the right of use of the property is recognised by White in Year 1
Explanation:
If the leaseback is known as an operating lease, the original transition to the buyer-lessor of the asset should be taken into account as the selling of an asset, given that all the income identification requirements have been fulfilled.
If the deal is of equal value, the lender lease is informed of the gain or loss of sale between the purchase price and the sum of the land that is held. Yet this is not a equal value trade. The property's sale price is higher than its market value. Accordingly, the income or loss on sale seems to be the difference between the equal worth and the value of the land.
Therefore, on 1 January, White records a benefit of $90,000 in revenue of $770,000 (fair value of $680,000 in carrying amounts)
Answer: 0 units
Explanation:
Future Planned Production Orders = Expected goods requirement - Finished goods in inventory - Schedule production
= 550 - 450 - 150
= -50 units
Include no units because the finished goods and the scheduled production make up the requirement for the period.
Savings account is what would go in the blank.
