nature of the lease arrangement and the accounting method
Not what you're looking for?
Mike Macinski Leasing Company leases a new machine that has a cost and fair value of $95,000 to Sharrer Corporation on a 3-year noncancelable contract. Sharrer Corporation agrees to assume all risks of normal ownership including such costs as insurance, taxes, and maintenance. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2008. Mike Macinski Leasing Company expects to earn a 9% return on its investment. The annual rentals are payable on each December 31.
Instructions
1.Discuss the nature of the lease arrangement and the accounting method that each party to the lease should apply.
2.Prepare an amortization schedule that would be suitable for both the lessor and the lessee and that covers all the years involved.
Purchase this Solution
Solution Summary
The nature of the lease arrangement and the accounting method is emphasized.
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Basics of corporate finance
These questions will test you on your knowledge of finance.