Distinguish between the accounting treatment of a capital lease versus an operating lease for a lessee both at the inception of the lease and during the first year of the lease (for the capital lease assume a transfer of ownership at the end of the first year of the lease).  Also, consider whether there is a change in account
Question 1 "If all chocolate is fattening, and if this dessert has chocolate in it, then this dessert must be fattening." This is an example of which kind of moral reasoning? A. deductive logic B. sense experience C. science D. intuition Question 2 A manager who makes ethical decisions on the basis of see
Jose Rijo Inc. owns and operates a number of hardware stores in the New England region. Recently the company has decided to locate another store in a rapidly growing area of Maryland. The company is trying to decide whether to purchase or lease the building and related facilities. Purchase: The company can purchase the site,
Discuss the impact of United Airlines moving from long-term debt funded aircraft purchasing to lease financing. Consider factors such as the impact on the asset value of the airline, debt-asset ratios, debt-equity ratios, cost of capital, and potential effects on shareholder rights in a bankruptcy filing, and the long-term respo
8. Proust Manufacturing Co. produces personal fitness machines sold through infomercials. The once successful line is no longer selling well, so the company is considering production of a new improved cardio-vascular machine. The project's expected after tax cash flow is given below. The after tax cash flow at time zero, $-700,0
You decide to use a lease to own service for a dishwasher for $29.99 per month for 24 months. The dishwasher currently sales for $499. What is the implied annual interest rate of the lease to own offer?
Windham Condos Corporation is a small company owned by Caleb Norman. It leases three condos of differing sizes to customers as vacation facilities. Labor costs for each condo consist of maid service and maintenance cost. Other direct operating costs consist of interest and depreciation. The direct operating costs for each condo
You are the controller for the Southwest Corporation. To expand your manufacturing facilities you are interested in acquiring several machine tools. Your company president has asked you give him advantages and disadvantages (comparisons) for buying this equipment or leasing this equipment. List at least four advantages and d
1. Management of Sundown Rent-a-Car (see Problem 8-8) has decided that perhaps the cost during the six-month period is not the appropriate Cost to minimize because the agency may still be obligated to additional months on some leases after that time. For example, if Sundown had some cars delivered at the beginning of the sixth m
1. Al Corporation has an operating profit of $10,000,000 and $100,000, 000 in sales. What is Al's profit margin (PM)? 2. Ala Corporation has net operating assets of $100,000,000 at 12/31/2010, $110,000,000 at 12/31/2011, and $100,000, 000 in sales for 2011. What is Al's average operating asset turnover (ATO) for 2011? 3. B
1. The new management of XYZ Inc. has increased the amount of their year-end expense accruals by over 25% compared to recent years, primarily in recording higher estimated future bad debts (bad debt expense). The most likely reason for this action is A) to increase net income this year to make the new management look goo
Fullhealth must prepare its annual operating budget for all lines of business. Divide the budget sections amongst its members and agree upon any necessary basics for a coordinated effort. Study all submissions and collaborate to write an executive summary. Prepare the annual operating budget summary including all lines of bus
You need a new CT scanner. The scanner can be leased under one of two options. Option A is a straight lease payment of $180,000 per year, payable one year in advance. Option B is a per-procedure lease basis. Under option B, you would pay $50,000 per year regardless of volume, payable one year in advance. In addition, $100 per pr
In concert with the IASB, the FASB is rethinking accounting for leases. Because obligations to make operating lease payments contribute to a company's riskiness, some accountants speculate that new lease standards might require leases now considered to be operating leases to be capitalized the way we now record capital leases.
I need help with this question concerning Kemp Corporation. I appreciate your help. Problem 1: Kemp Corporation is evaluating whether to lease or purchase equipment. The equipment will cost $500,000 if purchased, and the entire amount will be financed by a bank loan at an annual interest rate of 10 %. At the end of 4 years,
Describe the factors that determine whether expenditures toward property, plant, and equipment already in use should be capitalized. Describe how to account for the gain or loss on sale of property, plant and equipment for cash Discuss the important considerations in analyzing property, plant and equipment.
Allied Metals, Inc., is considering leasing $1 million worth of manufacturing equipment under a lease that would require annual lease payments in arrears for five years. The net cash flows to lessee over the term of the lease (with zero residual value) are given here. Allied's cost of secured debt is 12%, and its cost of capital
Revenue growth at HASBRO was strong in 2007 because of: a) Movie tie in merchandise related to Transformers and Spider Man 3 b) Inventory declining from $203 million to $179 million c) Receivables Increasing from $556 million to $655 million d All of the above The gross profit margin at Hasbro rose from 58.6% to 58.9%
You are an accountant at a small accounting firm. One of your clients is looking to open a small river-rafting business. Your client will run the business operations from a mobile home office on a piece of land on the riverbank. Your client must decide the best location to start this business and has asked you to explain the acc
Your company needs a new asset costing $500,000. 1. Discuss pros and cons of options for getting the resources (cash, or lease) to get this asset. For each option, discuss the impact on the financial statements, highlight an impact on at least two financial ratios and discuss the impact on the capital structure. 2. Pick a
1. Brett Hull Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,500,000 on March 1, $1,200,000 on June 1, and $3,000,000 on December 31 Brett Hull Company borrowed $1,000,000 on March 1 on a 5-year, 12% note to help finance construction of the building.
I need help writing a 300-400 word response to the following: Based upon your Week Three readings, prepare a response to the Caladonia Products Integrative Problem located in Chapter 10 of the Financial Management: Principles and Application text by Keown. Describe the factors that Caladonia would have to consider if they
B2. (Net advantage to leasing) New Horizon Natural Foods is considering whether to lease a delivery truck. A leasing company has offered to lease the truck. It costs $35,000. New Horizon has proposed a five-year lease that calls for annual payments of $7,850 at the beginning of each year. New Horizon could depreciate the truck t
In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as The amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease. The differen
As part of its overall plant modernization and cost reduction program, Western Fabrics' management has decided to install a new automated weaving loom. In the capital budgeting analysis of this equipment, the IRR of the project was found to be 20% versus a project required return of 12%. The loom has an invoice price of $250
See attached files. Can you please help me with this assignment. Please answer questions #2, #3 and #8. Please use the attached excel spreadsheet to support the analysis. Show all of your supporting works in Excel.
1. GS, Inc. stock is selling for $28 a share. A 3-month call on GS stock with a strike price of $30 is priced at $1.50. Risk-free assets are currently returning 0.3% per month. What is the price of a 3-month put on GS stock with a strike price of $30? 2. A firm has 100 shares of stock and 40 warrants outstanding. The war
Ozark, Inc. produces small-scale replicas of vintage automobiles for collectors and museums. Finished products are built on a 1/20th scale of originals. The firm's income statement showed the following: Revenue (2,400 units) $1,584,000 Variable expenses 871,200 Contribution margin 712800 Fixed ex
1. For accounting purposes, which of the following conditions would automatically cause a lease to be a capital lease? a. The lessee can purchase the asset below fair market value at the end of the lease. b. The lease transfers ownership of the asset to the lessee by the end of the lease. c. The lease term is more than
See attached files for complete problem. The Minnetonka Corporation, which produces and sells to wholesalers a highly successful line of water skis, has decided to diversify to stabilize sales throughout the year. The Company is considering the production of cross-country skis. After considerable research, a cross-country