Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Baridey Corporation is a lessee with a capital lease The asset is recorded at $450,000 and has an economic life of 8 years. The lease

image text in transcribed
Baridey Corporation is a lessee with a capital lease The asset is recorded at $450,000 and has an economic life of 8 years. The lease term is 5 years. The asset is expected to have a market value of $150,000 at the end of 5 years, and a market value of $50,000 at the end of 8 years. The lease agreement provides for the transfer of title of the asset to the lessee at the end of the lease term. What amount of depreciation expense would the lessee record for the first year of the lease? a. $90,000 b. $80,000 c. $60,000 d. $50,000 Huffman Company leases a machine from Lincoln Corp. under an agreement which meets the criteria to be a capital lease for Huffman. The six-year lease requires payment of $102,000 at the beginning of each year, including $15,000 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 10% the lessor's implicit rate is 8% and is known by the lessee. The present value of an annuity due of 1 for six years at 10% is 4, 79079. The present value of an annuity due of 1 for six years at 8% is 4.99271. Huffman should record the leased asset at a. a. $509, 256. b. $488, 661. c. $434, 366. d. $416, 799. On December 31, 20014, Pool Corporation leased a ship from Rent Company for an eight-year period expiring December 30, 2022. Equal annual payments of $200,000 are due on December 31 of each year, beginning with December 31. 2014 The lease is properly classified as a capital lease on Pool's books. The present value at 31, 2014 lease payments over the lease term discounted at 10% is $1, 173, 685. The amount should be reported by Pool Corporation as the total obligation under capital leases on its December 31, 2014 balance sheet is a. $1, 091, 054 b, $1,000, 159. c. $871, 054. d $973, 685. On 1/1/14. Ship leased office space to Shore for 10 years at $15,000 per month. On that date, Depreciation is $12,000 per year straight line. What is Ship's income in 2014 for this operating lease. a. $180,000 $168,000 c. $165,000 d $138,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internal Audit Leadership Elevating The Internal Audit Function To Accelerate Value

Authors: Patricia Kaim

1st Edition

1032557168, 978-1032557168

More Books

Students also viewed these Accounting questions