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Amiraneli [1.4K]
2 years ago
15

At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a ten-year operating lease agree

ment. The contract calls for quarterly rent payments of $28,000 each. The office building was acquired by Lakeside at a cost of $2.3 million and was expected to have a useful life of 25 years with no residual value.
What will be the effect of the lease on Lakeside's earnings for the first year (ignore taxes)?

Lakeside increases its earnings by $__________
Business
1 answer:
iVinArrow [24]2 years ago
6 0

Answer: $20,000

Explanation:

The effect of the lease on Lakeside's earnings will be the difference between the earnings from the lease and the cost of the building which will be depreciation.

Depreciation = 2,300,000/25

= $92,000 per year

Earnings per year;

= 28,000 * 4

= $112,000

Increase in earnings = 112,000 - 92,000

= $20,000

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2 years ago
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On October 1, Black Company receives a 10% interest-bearing note from Reese Company to settle a $22,200 account receivable. The
lorasvet [3.4K]

Answer:

$555

Explanation:

The computation of the interest revenue is shown below:

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The three month is calculated from October 1 to December 31. The six month period of note is ignored

4 0
3 years ago
The information content of a dividend increase generally signals that: A. the firm has a one-time surplus of cash.B. the firm ha
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Answer:

E

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When comparing the results of LIFO and FIFO when inventory costs are​ decreasing: A. ending inventory will be higher using LIFO.
Usimov [2.4K]

Answer:

B.

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