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Leno4ka [110]
3 years ago
13

Each of the independent situations below describes a lease requiring annual lease payments of $10,000. For each situation, deter

mine the appropriate lease classification by the lessee and indicate why.
Lease term = 4
Asset useful life = 6
Asset's FV = $44,000
Bargain Purchase = No
Annual Lease Payment = Begining
Lessor's implicit rate = 5%
Lessee's incremental borrow rate = 5%

Lease term = 4
Asset useful life = 5
Asset's FV = $43,000
Bargain Purchase = Yes
Annual Lease Payment = End
Lessor's implicit rate = 6%
Lessee's incremental borrow rate = 5%
Business
1 answer:
Kazeer [188]3 years ago
5 0

Answer:

Does the agreement specify that ownership of the asset transfers to the lessee? NO

Does the agreement contain a bargain purchase option? NO

Is the lease termequal to75% or more of the expected NOeconomic life of the asset? NO (4 < (.75 X 6))

Is the present value of the minimum lease payments equalto or greater than 90% of the fair value of the asset? NO

10,000 X 3.72325

=  (37233 < (.9 X 44,000))

Annuity  due : n=4, i=5%.

Does the agreement specify that ownership of the asset transfers to the lessee? NO

Does the agreement contain a bargain purchase option? YES  

Is the lease termequal to75% or more of the expected NOeconomic life of the asset? Yes (4 > .75X5)

Is the present value of the minimum lease payments equalto or greater than 90% of the fair value of the asset? NO

35,456 < (.9 X 43,000)

10,000 X 3.54595

Ordinary annuity

n=4, i = 5%.

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A clothing store has ordered 100,000 swimsuits. It costs $22 to produce a swimsuit. They plan to sell them until August 31 at a
fomenos

Answer:

Total profit = $1800000  @ a given demand level of 100K units of swimsuit.

Explanation:

Lets first develop a formula representing the Total profit for any demand level, see as follows:

(Selling price per unit× d) - (cost per unit× d)= Total profit

We will be using the short forms of the components in this formula.

SP = selling price per unit

d= demand

cp= cost per unit

TP= Total profit.

Now lets substitute the values into the formula to compute profit at any demand level (in this case 100,000 units of swimsuits) as follows:

Total profit = ($40× 100000) - ($22× 100000)

Total profit = $4000,000 - $2200,000

Total profit = $1800000  @ a given demand level of 100K units of swimsuit.

<em />

<em>(NOTE: The formula mentioned above can be used to compute the correct profit for any demand level, even though if there is a change in sp and/or cp, the formula can also be useful.)</em>

8 0
3 years ago
Proprietary and fiduciary funds follow account and reporting principles similar to those of ______ organizations.
suter [353]
City of New York

Hope this helps (:
8 0
2 years ago
Innovative Products reported net income of $219,000. Beginning and ending inventory balances were $44,500 and $46,500, respectiv
andrew11 [14]

Answer:

$213,500

Explanation:

Given the information above, first, we'll determine increase in inventory

Increase inventory = Ending inventory - Beginning inventory

Increase inventory = $46,500 - $44,500

Increase inventory = $2,000

We will also calculate decrease in account payable

Decrease in accounts payable = Beginning accounts payable - Ending accounts payable

Decrease in accounts payable = $40,500 - $37,000

Decrease in accounts payable = $3,500

Therefore,

Net operating cash flows = Net income - Increase inventory - Decrease in accounts payable

Net operating cash flows = $219,000 - $2,000 - $3,5000 = $213,500

3 0
3 years ago
a plant asset trade-in with commercial substance means that it changes the company's: multiple choice question. current cash flo
stellarik [79]

We can actually deduce here that a plant asset trade-in with commercial substance means that it changes the company's: Future cash flows.

<h3>What is cash flow?</h3>

In Business, cash flows actually refers to the amount of the net cash and its equivalent that is actually being moved or transferred in and out of the company.

When cash is received by the company or organization, it is said to be cash inflow while the cash that is being spent to run the daily to day activities of the company are known as cash outflow.

Thus, we see that a plant asset trade-in with commercial substance means that it changes the company's  future cash flows. The future cash flow is the expected inflow and outflow of cash in the future.

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3 0
1 year ago
"The Marlene Doll Co. uses a process costing system. Consider the following data for Dept. A. UNITS: W-1-P Nov. 1: 8,000 units,
Law Incorporation [45]

Answer:

The Marlene Doll Co.

Weighted-AVerage Method

Cost of production:

COSTS: W-1-P Nov. 1:                    $9,600         $4,800

Costs added in November:           15,600         14,400

Total costs for the month          $25,500       $19,200

Equivalent units of production:

                                       Units   Materials  Conversion

Transferred to Dept B: 12,000     12,000        12,000

W-1-P Nov. 30:               6,000       6,000         3,000

Equivalent units                            18,000        15,000

Cost per equivalent units:

                                            Materials    Conversion

Total costs for the month   $25,500       $19,200

Equivalent units                      18,000         15,000

Cost per equivalent unit       $1.42           $1.28

Costs assigned to:

Units Transferred to Dept B:  $17,040      $15,360              $32,400

                                     (12,000 *$1.42)     (12,000 * $1.28)  

W-1-P Nov. 30:                           8,520           3,840                 12,360

                                     (6,000 *$1.42)     (3,000 * $1.28)

Total costs assigned           $25,560       $19,200              $44,760

 

FIFO Method

Equivalent units of production:

                                                Units   Materials  Conversion

W-1-P Nov. 1:                           8,000      0 (0%)        2,000  (25%)

Units started & completed: 10,000     10,000        10,000

W-1-P Nov. 30:                       6,000      6,000         3,000

Equivalent units                                   16,000        15,000

Cost per equivalent units:

                                            Materials    Conversion

Total costs for the month    $15,600         14,400

Equivalent units                      16,000        15,000

Cost per equivalent unit       $0.975        $0.96

Costs assigned this month to:

Work-in-Process                      $0                 $1,920                $1,920

                                     (0 *$0.975)         (2,000 * $0.96)  

Units completed                      $9,750        $9,600              $19,350

                                     (10,000 *$0.975)   (10,000 * $0.96)  

W-1-P Nov. 30:                           5,850           2,880                 8,730

                                     (6,000 *$0.975)    (3,000 * $0.96)

Total costs assigned            $15,600        $14,400            $30,000

Total costs of:

Units transferred out         $19,350       $16,320         $35,670

W-1-P Nov. 30:                       5,850           2,880              8,730

Total costs                        $25,200       $19,200         $44,400

Explanation:

a) Data and Calculations:

Dept. A. UNITS:

                                        Units   Materials  Conversion

W-1-P Nov. 1:                    8,000      100%           75%

Started in November:   10,000

Transferred to Dept B: 12,000      100%          100%

W-1-P Nov. 30:                6,000      100%           50%

6 0
2 years ago
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