Answer:
Decrease; inelastic
Explanation:
Let's say the demand elasticity for Aaron's scones is |.5|. Then for a 1% increase in prices, there will be a .5% DECREASE in quantity demanded. Demand is INELASTIC.
Because demand elasticity is greater than one(1.5), it is price elastic i.e it is sensitive to price. An increase in price will lead to a decrease in quantity demanded and vice-versa.
But because the responsiveness in quantity demanded or the sensitivity to the change in price is not significant, the demand is inelastic.
Answer:
Part 1
Dr Lease rentals $300........ Expense
Cr Cash Account $300
Part 2
Dr Leased Equipment $63,536
Cr Finance Lease Liability $63,536
Explanation:
Part 1. Under the operating leases the lessee pays the monthly rentals which must be accounted for as an expense and the double entry is as under:
Dr Lease rentals $300........ Expense
Cr Cash Account $300
Part 2. Under the finance lease agreement, the lessee pays the value of the asset and the interest as well. So after the date of agreement when the asset is handed over the journal entry would be recording of the equipment received, which would written at its fair value or present value of the payments made. The journal entry would be:
Dr Leased Equipment $63,536
Cr Finance Lease Liability $63,536
I think it is when the price is lower then in the past. I am not sure.
Its free real estate----------------------------
