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: Option (B) is correct.
Explanation:
Public saving refers to the tax revenue amount that a government left with after paying for its expenditure or spending.
Public saving = Tax revenue - Spending
Private saving refers to the after tax income of the individuals after paying for their consumption and taxes.
Suppose there is a government budget deficit, in this situation government's expenditure is greater than government's receipts. This means that tax revenue is not enough to pay out its expenditure.
Therefore, this will lead to negative public savings.
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<span><span>Depreciation is a </span>sunk cost. </span></span>It is the value lost on an asset
after consumption. In accounting, depreciation cost qualifies as a sunk cost
because it is already lost and cannot be recovered. For that reason, it is
correct to ignore depreciation cost when determining the future course of a
business.
Answer:
exist 139,200
Explanation:
Assume that Pell allocates manufacturing overhead based on machine hours, estimated 10,000 machine hours and exist 87,000 that implies that the standard cost per machine hour = exist 87,000 / 10,000 = 8.7 exist
Therefore the manufacturing overhead costs if Pell actually used 16,000 machine hours will be: 16000 x 8.7 = exist 139,200
<span>A monopolist sells 6 units of a product per day at a unit price of $15. if it lowers price to $14, its total revenue increases by $22. this implies that its sales quantity increases by: 8 units.
To solve for the original sales amount: (6 units)($15) = $90
Next find the new unit amount: (8 units)($14) = $112
The difference between these two is a $22 sales increase which means to have the difference in sales be $22 there were 8 units sold instead of 6 units.
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