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Calloway Company: Compute Interest on a financing lease

3. (1) On January 1, 2009, Calloway Company leased a machine to Zone Corporation. The lease qualifies as a direct financing lease. Calloway paid $240,000 for the machine and is leasing it to Zone for $34,000 per year, an amount that will return 10% to Calloway. The present value of the minimum lease payments is $240,000. The lea

Annual depreciation of XYZ company

4. (1) XYZ Company leased equipment to West Corporation under a lease agreement that qualifies as a capital lease to West. The cost of the asset is $600,000. The expected economic life of the asset is ten years. The lease term is 5 years. Using the straight-line method, what would West record as annual depreciation? A. $120,

Funding options

In 200-300 words: What are some considerations when deciding on a funding option (i.e. leasing, financing, etc.)? please provide references if used


1. Which of the following items should not be included in the Cash caption on the balance sheet? A) Coins and currency in the cash register B) Checks from other parties presently in the cash register C) Amounts on deposit in checking account at the bank D) Postage stamps on hand 2. Bank overdrafts, if material, sho

United Hospital Leasing proposal for a Siemens cardiac

United Hospital has received a leasing proposal from Leasing, Inc., for a Siemens cardiac catheterization unit. The terms are: - Five-year lease - Annual payments of $200,000 payable one year in advance - Payment of property tax estimated to be $23,000 annually - Renewal at end of year 5 at fair market value Alternative

Five-Year Lease Payments

United Hospital has received aleasing proposal from Leasing, Inc. for a Siemens cardiac cateterization unit. The terms are: Five-year lease Annual Payments of $200,000 payable one year in advance Payment of property tax estimated to be $23,000 annually Renewal at end of year 5 at fair market value Alternatively, United

Journal Entries and Balance Sheet: Cascade Industries and Hardy

(Lessee-Lessor Entries, Balance Sheet Presentation; Sales-Type Lease) Cascade Industries and Hardy Inc. enter into an agreement that requires Hardy Inc. to build three diesel-electric engines to Cascade's specifications. Upon completion of the engines, Cascade has agreed to lease them for a period of 10 years and to assume a

Proper Accounting Treatment for Leases

Your accounting firm has been hired to consult with the Graduate Manufacturing Company (GMC). GMC is preparing its annual financial statements as of December 31. GMC entered into five separate lease arrangements at the beginning of the year. Each lease provides for annual lease payments at the beginning of each year. For e

Lease versus Buy Decision

List the advantages of an organization choosing to lease an asset instead of buying it? Why are these advantages important? Describe the effect interest rates have on the decision to lease vs. buy?

Business for Huffman Company Leases

1.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 $500,000 at the beginning of each year, including $25,000 per year for maintenance, insurance, and taxes. The incremental borrowing rate for the lessee is 12%


Eddy leased equipment to Hoyle Company on May 1, 2008. At that time the collectibility of the minimum lease payments was not reasonably predictable. The lease expires on May 1, 2009. Hoyle could have bought the equipment from Eddy for $3,200,000 instead of leasing it. Eddy's accounting records showed a book value for the equipm

Managerial Accounting for Goetz Company

1. Goetz Company has operating assets of $20,000,000. The company's operating income for the most recent accounting period was $2,640,000. The East Division of Goetz controls $7,500,000 of the company's assets and earned $1,170,000 of its operating income. Goetz's desired ROI is 10 percent. Goetz has $900,000 of additional funds

Methods for Financing Business Operations Presentation

You have been asked to prepare a presentation for the board of directors, regarding the methods for financing business operations. They would like answers to the following questions concerning the use of debt or equity as financing vehicles. What factors would cause our corporate management to obtain cash by issuing bonds, in

Example you are considering purchasing a company - assets, liabilities, warts, and all. You are aware that sometimes liabilities do not always show up on the balance sheet. can you discuss five examples of liabilities that may not be explicitly recognized on the balance sheet, can you explain why they are liabilities.

Example you are considering purchasing a company - assets, liabilities, warts, and all. You are aware that sometimes liabilities do not always show up on the balance sheet. can you discuss five examples of liabilities that may not be explicitly recognized on the balance sheet, can you explain why they are liabilities.

Disclosures Required in Various Situations

Instructions For each of the items below discuss any additional disclosures in the financial statements and notes that the auditor should recommend to her client. (The cumulative effect of the four items should not be considered.) Rem Inc. produces electronic components for sale to manufacturers of radios, television sets, a

Amount of equipment, accumulated depreciation, payable

Quattro Corporation signed a lease from Cinco Leasing Company of July 1, 20X3, for equipment having a five-year useful life. The lease does not include any option to purchase the equipment at the end of the four-year lease term, nor does it include a provision for ownership transfer. Five equal payments of $10,000 per year are r

Finance Problem: Lease vs. Purchase Equipment

Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for $900,000, it will depreciate it over 5 years, using straight-line depreciation. If the company enters into a 5-year lease, the lease payment is $200,000 per year, payable at the beginni

Financial Accounting for Hungry Macs Ltd.

Hungry Macs Ltd is a chain of fast food restaurants and is renewing a restaurant and associated block of land from Red Leasing Ltd. The lease has always been treated as an operating lease however with the only difference this renewal is that the building is set to be demolished at the end of the lease term and land sold to make

WWWeb Marketing Current Policy

Problem 8-12 "WWWeb Marketing" WWWeb Marketing is a decentralized firm specializing in designing and operating Internet marketing web sites. The firm is four years old and has been growing rapidly' but it only shows a small profit. WWWeb has three profit centers: Design Division, Server Operations' and the Crawler Division. T

How should the lessee classify these leases? Capital or operating?

Lease A does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease B does not transfer ownership ofthe property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased

The Option Value of a Lease

There's an oil leasing opportunity that looks too good to be true, and it probably is too good to be true: an estimated 1,500,000 barrels of oil sitting underground that can be leased for 3 years for just $1,000,000. It looks like a golden opportunity: pay a million, bring the oil to the surface, sell it at the current spot pri

Leasing or Owning New Equipment

Suppose Procter and Gamble ("P&G") is considering purchasing $15 million in new manufacturing equipment. If it purchases the equipment, it will depreciate it on a straight-line basis over the next five years, after which the equipment will be worthless. It will also be responsible for maintenance expenses of $1 million per year.

Close or retain a store

Shadow Inc operates three stores in a large metroploliian area. The company's segmented absorption income statement for the last quarter is given below: Total Uptown Downtown Westpark Store Store Store Sales $2,500,000 $900,000 $600,000 $1,000,000 Cost of goods sold 1,450,000 513,000 372,000

Solve: Lease Versus Buy

Assuming that Reynolds tax rate is 40 percent and the equipment's depreciation would be $100 per year. If the company leased the asset on a 2-year lease, the payment would be $110 at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 10 percent interest on the loan. Should Reynolds lease or buy th

Arcadia Hospital: Revenue Variance Analysis.

Determine the revenue variance from Arcadia Hospital's 2005 budget. Address the following: Is the variance positive or negative? Which is desirable, a positive or negative variance? Why? What do you think are some of the possible causes for this variance? How would you adjust Arcadia Hospital's 2006 budget in light of your vari

Business plan for a new hotel

Prepare a business plan powerpoint briefing that consists of at least slides covering the below topics. The plan is for a new hotel in Florida. I have attached the template to be used. 1. Product a. What customer need will we satisfy? b. How can our product be unique? 2. Customer a. Who are our customers? What are their

Legalities of Zoya's Lease with Peerless

This response will be no more than 1 or 2 paragraphs with a legal argument that includes the following: 1. A brief restatement of the legal question posed. 2. A statement of the applicable law or rule that should be applied to the facts in this case. 3. A clear statement that explains how you applied the applicable law to the