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Mariana [72]
3 years ago
15

Breonna Corporation leases equipment from Falls Company on January 1, 2020. The lease agreement does not transfer ownership, con

tain a bargain purchase option, and is not a specialized asset. It covers 3 years of the equipment's 8-year useful life, and the present value of the lease payments is less than 90 % of the fair value of the assets leased. The annual lease payment is $41,000 at the beginning of each year, and Breonna's incremental borrowing rate is 8%, which is the same as the lessor's implicit rate. The agreement is properly classified as an operating lease. Assume the equipment is carried at a cost of $280,000 and the Straight-Line method for depreciation is used. In preparing the necessary journal entries for Falls Company (the lessor) for 2020, the "Leased Equipment" account should include a debit for depreciation expense of ___________. (Enter the answer with NO commas or dollar signs!)
Business
1 answer:
maksim [4K]3 years ago
7 0

Answer:

$35,000

Explanation:

Since this is an operating lease (short lease term, no transfer of ownership, and low present value of lease payments), the lessor has to record a depreciation expense, but the lessee only considers lease payments as operating costs (no depreciation expense or lease liability should be recognized).

Depreciation expense per year under the straight line method = asset cost / useful life = $280,000 / 8 years = $35,000

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Pretzelmania, Inc., issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2021. The market interest r
AlexFokin [52]

Answer:

Pretzelmania, Inc.

1. Records:

Debit Cash $70,000

Credit Bonds Liability $70,000

To record the issuance of 7% bonds at face value.

June 30:

Interest Expense $2,450

Cash payment for interest $2,450

To record the first interest expense and payment.

(No amortization of discounts or premiums)

December 31: (not required but showed for emphasis)

Debit Interest Expense $2,450

Credit Cash payment for interest $2,450

To record the second interest expense and payment.

(No amortization of discounts or premiums)

2. Records:

Debit Cash $63,948

Bonds Discounts $6,052

Bonds Liability $70,000

To record the issuance of 7% bonds at discounts.

June 20, 2015:

Debit Interest Expense $2,557.92

Credit Amortization of bonds discounts $107.92

Credit Cash payment for interest $2,450

To record the first interest expense and payment, including amortization of bonds discounts.

December 31, 2015: (not required but showed for emphasis)

Debit Interest Expense $2,562.24

Credit Amortization of bonds discounts $112.24

Credit Cash payment for interest $2,450

To record the second interest expense and payment, including amortization of bonds discounts.

3. Records:

Debit Cash $76,860

Credit Bonds Liability $70,000

Credit Bonds Premium $6,860

To record the issuance of 7% bonds at premium.

June 30, 2015:

Debit Interest Expense $2,305.80

Debit Amortization of bonds premium $144.20

Credit Cash payment for interest $2,450

To record the first interest expense and payment, including amortization of bonds premium.

December 31, 2015: (not required but showed for emphasis)

Debit Interest Expense $2,301.50

Debit Amortization of Bonds Premium $148.50

Credit Cash payment for interest $2,450

To record the second interest expense and payment, including amortization of bonds premium.

Explanation:

1.  issues 7%, 10-year bonds with a face amount of $70,000 for $70,000 on January 1, 2021. The market interest rate for bonds of similar risk and maturity is 7%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $70,000

Interest rate on bonds = 7%

Market interest rate = 7%

Period of bonds = 10 years

Payment period = semiannually

Issue date = January 1, 2021

June 30:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,450 ($70,000 * 3.5%)

Cash payment for interest = $2,450

No amortization of discounts or premiums

December 31:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,450 ($70,000 * 3.5%)

Cash payment for interest = $2,450

No amortization of discounts or premiums

2. Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $63,948 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 8%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $63,948

Bonds discounts = $6,052 ($70,000 - $63,948)

Interest rate on bonds = 7%

Market interest rate = 8%

Period of bonds = 15 years

Payment period = semiannually

Issue date = January 1, 2015

June 30, 2015:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,557.92 ($63,948 * 4%)

Amortization of bonds discounts = $107.92 ($2,557.92 - $2,450)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

December 31, 2015:

Semiannual interest rate = 3.5% (7%/2)

Interest Expense = $2,562.24 (($63,948 + 107.92) * 4%)

Amortization of bonds discounts = $112.24 ($2,562.24 - $2,450)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

3. Pretzelmania, Inc., issues 7%, 15-year bonds with a face amount of $70,000 for $76,860 on January 1, 2015. The market interest rate for bonds of similar risk and maturity is 6%. Interest is paid semiannually on June 30 and December 31.

a) Data and Calculations:

Face value of bonds = $70,000

Issuance value = $76,860

Bonds premium = $6,860 ($76,860 - $70,000)

Interest rate on bonds = 7%

Market interest rate = 6%

Period of bonds = 15 years

Payment period = semiannually

Issue date = January 1, 2015

June 30:

Semiannual interest rate = 3.5% (7%/2)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

Interest Expense = $2,305.80 ($76,860 * 3%)

Amortization of bonds premium = $144.20 ($2,450 - $2,305.80)

December 31:

Semiannual interest rate = 3.5% (7%/2)

Cash payment for interest = $2,450 ($70,000 * 3.5%)

Interest Expense = $2,301.50 (($76,860 -144.20) * 3%)

Amortization of bonds premium = $148.50 ($2,450 - $2,301.50)

(Record bond issue and related semiannual interest)

3 0
3 years ago
C&K Brewing Company is a microbrewery in western Canada. It produces Maiden’s Honor brand ale, a dark beer called Warrior’s
ehidna [41]

Answer:

The correct answer is letter "A": concurrent .

Explanation:

Concurrent control is adopted to regulate ongoing activities in an organization so that they can meet the company's standards. This type of control is chosen to ensure that the output will have the results expected. It implies measuring the quality of the processes at a certain point in time to determine to continue with them or not.

3 0
3 years ago
Dye Trucking raised $85 million in new debt and used this to buy back stock. After the recap, Dye's stock price is $8.50. If Dye
ivanzaharov [21]

Answer:

60,000,000

Explanation:

Dye trucking raised $85 million to buy stock

After the recap Dye's stock price is $8.50

Dye share had 70 million share before the recap

Therefore the number of shares present after the recap can be calculated as follows

= 70,000,000-(85,000,000/8.50)

= 70,000,000-10,000,000

= 60,000,000

Hence the number of shares after the recap is 60,000,000

8 0
3 years ago
In 2015, a former Google engineer, Erica Baker, made a spreadsheetshowing pay disparities at the company. She shared the informa
Studentka2010 [4]

Answer:

b. Organizational justice.

Explanation:

In reacting to the allegations that Google engages in "systematic compensation disparities against women" and the request of payroll records by the U.S. Department of Labor in 2017.

Google annually reviews pay levels and denies any disparities against women. In reviewing pay levels, Google's management is focused on organizational justice. The concept of organizational justice was first introduced by Greenberg in the year 1987.

Organizational justice is an organizational concept that describes an employee's perception of decisions, fairness, behaviors and actions with respect to how these employees are affected or influenced both psychologically and other wise at work.

Organisational justice deals with all workplace related activities, ranging from salary to relationships between superiors and their subordinates, equal rights, gender equality and even access to training and promotion.

For the purpose of trust, loyalty and progressive work attitudes, it is very important that organizations prioritize organizational justice.

Hence, if Google focuses on organizational justice, it will help to build trust and address the issue of pay level disparities among its employees.

6 0
3 years ago
Aflak Corporation, an Omani firm, is currently planning goods market in India. Aflak Corporation will most likely discover that_
Diano4ka-milaya [45]

The correct answer is B) traditional.

Aflak Corporation, an Omani firm, is currently planning goods market in India. Aflak Corporation will most likely discover that traditional beliefs and values are more open to change in India.

When a multinational company is planning on initiating operations in another country, it has to be very sensible of the traditional values of that country. The company is getting into a new market and people could have different belief systems, different culture, traditions, and customs, that need to be carefully assessed by the multinational company if they are about to be successful in the new country.

This is the case of India, which has always have very strict traditional values, although younger generations are relaxing those values in recent years.

8 0
3 years ago
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