1. Please explain in your own words the four criteria used for determining if a lease is to be treated as a capital lease, as opposed to as an operating lease. 2. Please discuss contingencies and how they are reported on financial statements. What conditions must be met before a contingency can be charged against income?
1). Consider the following data for two risk factors (1 and 2) and two securities (J and L). rf = 0.05 bJ1 = 0.80 rm1 = 0.02 bJ2 = 1.40 rm2 = 0.04 bL1 = 1.60 bL2 = 2.25 a. Compute the expected returns for both securities. b. Suppose that security J is currently priced a
I need help getting started on my paper. I need to describe the factors that need to be considered if a company was looking to purchase new equipment and they were going to lease the equipment versus buying the equipment.
We have been paying a rental fee for a forklift but are at the end of the contract and will be buying it out for $1.00. What is the accounting transaction for a Capital Lease with the $1 Buyout?
See attached file. A local businessman decides to purchase a specialized piece of production equipment at a capital cost of $403,000. The businessman manufactures cardboard boxes, and a particular machine is essential in the production process. The firm will save annual machine leasing costs of $104,000 per year. The machine
Hello, I need assistance with the following: (Lessee-Lessor Entries; Sales-Type Lease) On January 1, 2007, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease: 1. The term of the non-cancelable lease is 6 years, with no renewal option. The equipment reverts to the lessor a
The Chicago Omni Hotel is a 750-room luxury hotel offering guests the finest facilities in downtown Chicago. The hotel is organized into four departments: lodging, dining, catering, and retail stores. Each of these departments is treated as a profit center. Lodging is the largest profit center and is responsible for room rent
Explain the comparison of the current reporting for debt, explaining the requirements for each type (bond, mortgage, capital lease).
Evaluating Decision-Making Scenarios Using Linear Profit Modeling Analyze cost behaviors and decision-making scenarios using the linear profit model. Darien Industries Darien Industries operates a cafeteria for its employees. The operation of the cafeteria requires fixed costs of $4,700 per month and variable costs of 40
The owner of an Italian restaurant has just been notified by her landlord that the monthly lease on the building in which the restaurant operates will increase by 20 percent at the beginning of the year. Her current prices are competitive with nearby restaurants of similar quality.However, she is now considering raising her pric
As a CPA of a company, which method of accounting for leases would you recommend using? What are the pros and cons ?
On March 1, Midway Distribution Company is considering leasing a building and buying the necessary equipment to operate a public warehouse. Alternatively, the company could use the funds to invest in $750,000 of 7% U.S. Treasury bonds that mature in 14 years. The bonds could be purchased at face value. The following data have be
See attached Excel file. Understanding the effects of operating leverage High Tech Inc and Old time Co. compete within the same industry and had the following operating results in 2010: High Tech Inc Old Time Inc Sales $2,100,000 $2,100,000 Variable expenses $ 420,000 1,260,000 Contribution margin $1,
Identify the two recognized lease accounting methods for lessees and distinguish between them.
Create a Chart of Accounts-consider the following. What assets your company will require Your investment Revenue At least 3 expenses Your capital and withdrawal accounts As a sole proprietor cleaning business. Discuss the internal controls necessary for your business. Consider how the Sarbanes-Oxley Act applies. D
See attached file for full problems. P 7-8: Jolsen International P 7-23: Chicago Omni Hotel -------- P 7-8: Jolsen International Jim Shoe, chief executive officer of Jolsen International, a multinational textile conglomerate, has recently been evaluating the profitability of one of the company's subsidiaries, P
On January 1, 2011, Secada Co. leased a building to Ryker Inc. The relevant information related to the lease is as follows. The lease arrangement is for 10 years. The leased building cost $3,600,000 and was purchased for cash on January 1, 2011. The building is depreciated on a straight-line basis. Its estimated economic l
Relevant Costing Problems Westcost Air Co. leases a single jet aircraft and operates between San Francisco and the Fiji. Flights leave San Francisco on Mondays and Thursdays and depart from Fiji on Wednesdays and Saturdays. Westcost Air Co. cannot offer any more flights between San Francisco and Fiji. Only tourist-class s
Compare and contrast sales type leases and direct financing.
To meet the need for its expanding operations, Johnson Corporation obtained a charter for a separate corporation whose purpose was to buy a land site, build and equip a new building, and lease the entire facility to Johnson Corporation for a period of twenty years. Rental to be paid by Johnson was set at an amount sufficient to
Review the attached EBAY and Amazon.com Balance Statements and discuss the debt and current ratios (Conclusions drawn) for both companies and last two years.
Westcost Air Co. leases a single jet aircraft and operates between San Francisco and the Fiji. Flights leave San Francisco on Mondays and Thursdays and depart from Fiji on Wednesdays and Saturdays. Westcost Air Co. cannot offer any more flights between San Francisco and Fiji. Only tourist-class seats are available on its plan
John Smith, Esq. I worked on this case for over two years. The jury awarded my client $2,000,000 in damages, of which my fee was $300,000 plus recovery of expenses paid up front in the amount of $25,000. How is the $300,000 taxed? What about the $25,000? What can I do to minimize the tax consequences of each? Also, I am th
John Smith - I worked on this case for over two years. The jury awarded my client $2,000,000 in damages, of which my fee was $300,000 plus recovery of expenses paid up front in the amount of $25,000. How is the $300,000 taxed? What about the $25,000? What can I do to minimize the tax consequences of each? Also, I am thinking ab
SCENARIO John Smith - I worked on this case for over two years. The jury awarded my client $2,000,000 in damages, of which my fee was $300,000 plus recovery of expenses paid up front in the amount of $25,000. How is the $300,000 taxed? What about the $25,000? What can I do to minimize the tax consequences of each? Also, I a
Krauss Leasing Company signs a lease agreement on January 1, 2011, to lease electronic equipment to Stewart Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement: 1.Stewart Company has the option to purchase the equipme
Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a 5-year, $4,200,000 bank loan to finance service equipment. The loan has an interest rate of 10% and would be amortized over 5 years, with 5 end-of-year payments. Sutton can also lease the equipment for 5 end-of-year payments of $1,790,
Required: 6 line reponse to each question. Can you also provide APA references My Question: From a firms perspective, discuss how the following factors may affect the attractiveness of leasing as compared with other financing arrangements: i) Corporate tax rate ii) Inflation iii) Interest Rates.
On January 1, 201x, Avery Accessories, Inc. entered into a 4 year, non-cancelable lease for a fleet of automobiles. The economic life of the vehicles are 4 years, and title transfers at the end of the leasing period, with bargain purchase price of $75,000. The lease calls annual payments of $150,000, beginning with the signi
Week 3 - DQ 1. How would you recommend investment securities be reported (fair value controversy)? Provide detailed rationale. (Ch. 17 of Intermediate Accounting) Investments should definitely be reported at their fair value, as opposed to other accounting methods. The historical cost method is what is currently reflected