Answered step by step
Verified Expert Solution
Question
1 Approved Answer
# 1 : Lone Star Sales & Service acquired a new machine that cost $ 8 4 , 0 0 0 in early 2 0
#: Lone Star Sales & Service acquired a new machine that cost $ in early The machine is expected to have a fiveyear useful life and is estimated to have a salvage value of $ at the end of its life. Round your final answers to the nearest dollar.
a Using the straightline depreciation method, calculate the depreciation expense to be recognized in the second year of the machine's life and calculate the accumulated depreciation after the third year of the machine's life.
b Using the doubledecliningbalance depreciation method, calculate the depreciation expense for the third year of the machine's life and the net book value of the machine at this point in time.
#: Lessee, Inc., acquired the use of a machine by agreeing to pay the manufacturer of the machine $ per year for years. At the time the lease was signed, the interest rate for a year loan was
Required:
a Use the appropriate factor from Table to calculate the amount that Lessee, Inc. could have paid at the beginning of the lease to buy the machine outright.
b What causes the difference between the amount you calculated in part a and the total of $$ per year for years that Lessee, Inc. will pay under the terms of the lease?
c What is the appropriate amount of cost to be reported in Lessee, Inc's balance sheet at the time the lease was signed with respect to this asset?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started