NutraLabs, Inc. leased a protein analyzer to Werner Chemical, Inc., on September 30, 2011. NutraLabs manufactured the
Question:
NutraLabs, Inc. leased a protein analyzer to Werner Chemical, Inc., on September 30, 2011. NutraLabs manufactured the machine at a cost of $5 million. The five-year lease agreement calls for Werner to make quarterly lease payments of $391,548, payable each September 30, December 31, March 31, June 30, with the first payment at September 30, 2011. NutraLabs' implicit interest rate is 12%.
Required:
1. Determine the price at which NutraLabs is “selling” the equipment (present value of the lease payments) at September 30, 2011 (to the nearest $000).
2. What pretax amounts related to the lease would NutraLabs report in its balance sheet at December 31, 2011?
3. What pretax amounts related to the lease would NutraLabs report in its income statement for the year ended December 31, 2011?
4. What pretax amounts related to the lease would NutraLabs report in its statement of cash flows for the year ended December 31, 2011?
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
1 Calculation of the present value of lease payments selling price 391548 x 1532380 F 6000000 rounded F present value of an annuity due of 1 n20 i 3 2 Receivable at December 31 2011 Receivable Initial ...View the full answer
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
