Accounting for Leases
Not what you're looking for?
On January 2, 2004, Gonzalez, Inc. signed a ten-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $90,000 starting at the end of the first year, with title passing to Gonzalez at the expiration of the lease. Gonzalez treated this transaction as a capital lease. The drill press has an estimated useful life of 15 years, with no salvage value. Gonzalez uses straight-line depreciation for all of its plant assets. Aggregate lease payments were determined to have a present value of $540,000, based on implicit interest of 10%.
In its 2004 income statement, what amount of interest expense should Gonzalez report from this lease transaction?
In its 2004 income statement, what amount of depreciation expense should Gonzalez report from this lease transaction
Purchase this Solution
Solution Summary
The solution explains how to calculate the amount of depreciation and interest expense under lease accounting
Solution Preview
In its 2004 income statement, what amount of interest expense should Gonzalez report from this lease transaction?
The interest ...
Purchase this Solution
Free BrainMass Quizzes
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Operations Management
This quiz tests a student's knowledge about Operations Management
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.