Gage Co: amount of lessee's liability to lessor
Not what you're looking for?
Gage Co. purchases land and constructs a service station and car wash for a total of $360,000. At January 2, 2010, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for $400,000 and immediately leased from the oil company by Gage. Fair value of the land at time of the sale was $40,000. The lease is a 10-year, noncancelable lease. Gage uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Gage at termination of the lease. A partial amortization schedule for this lease is as follows:
Payments Interest Amortization Balance
Jan. 2, 2010 $400,000.00
Dec. 31, 2010 $65,098.13 $40,000.00 $25,098.13 374,901.87
Dec. 31, 2011 65,098.13 37,490.19 27,607.94 347,293.93
Dec. 31, 2012 65,098.13 34,729.39 30,368.74 316,925.19
What is the amount of the lessee's liability to the lessor after the December 31, 2012 payment? (Rounded to the nearest dollar.)
Purchase this Solution
Solution Summary
The questions gives lots of data but then asks for a simple answer. This is explained to you.
Solution Preview
The questions gives lots of data but then asks for a simple answer.
The sale-leaseback is really a form a financing and there should not be any "gain" recorded on the transaction. In other words, the $360,000 original ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations