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financial analysis

Dixie Corporation is evaluating whether to lease or purchase needed equipment at a cost of $10,000. If the equipment is leased, the lease would not have to be capitalized. The company's balance sheet prior to the acquisition of the equipment is as follows. Equipment cost $10,000 Current Balance Sheet

Incremental profit, NPV, accounting rate of return, more

Thomas, Inc. estimates it will produce 1,200 homework machines during the next year with costs as follows: Direct materials $200 per unit Direct labor $240 per unit Variable overhead $160 per unit Fixed overhead (40% avoidable) $300 per unit An outside supplier has offered to produce the machines for Thomas for $700 a unit.

An asset is an expense waiting to happen.

ABC Inc. has just entered into the business of selling antique cars. The company management decided to lease the premises for the business instead of buying the office premises. They ended up paying an advance rent of $5 million dollars for the initial period of five years. The entire amount was recorded as an asset in the form

Cost Allocation Theory

Looking to understand the theory/logic/reasoning and/or implications that support the values arrived at for a.) thru e.). Durango Plastics: SCX is a $2 billion chemical company with a plastics plant located in Durango, Colorado. The Durango plastics plant of SCX was started 30 years ago to produce a particular plastic fi

MT425 AP2-11 Recording inventory-related costs; E4-1 Operating Leverage

See problem attached. MG425 Managerial financial Accounting Chapters 1 & 2, Chapters 4 & 5 AP2-11 Recording inventory-related costs Fill in the missing information E4-1 Operating leverage John Diaz owns Pacific Electric, a large electrical contracting firm.... Identify a way that John can turn potential fixed c

Tenant has a lease on an apartment through December of the current year. Tenant and Newtenant go to Landlord to have Newtenant take over the lease through the end of December. Landlord agrees and releases Tenant from any responsibility under the lease. This is a(n): A. substituted contract. B. accord and satisfaction. C. novation. D. mutual rescission.

Tenant has a lease on an apartment through December of the current year. Tenant and Newtenant go to Landlord to have Newtenant take over the lease through the end of December. Landlord agrees and releases Tenant from any responsibility under the lease. This is a(n): A. substituted contract. B. accord and satisfaction. C. nova

Phillip Morris (Altria) 2009 Annual Report Analysis

a. What is the composition of Phillip Morris' total long-term liability in current year? b. What is the Phillip Morris' Debt to Equity Ratio for current year and prior year? What does it express? Please show details for the numerator and denominator to receive full credit. c. What is the Phillip Morris' Times Interest Earned

Evaluating Decision-Making Scenarios Using Linear Profit and Cost Modeling

Please see attached file for questions. Vintage Cellars Vintage Cellars manufactures a 1,000-bottle wine storage system that maintains optimum temperature (55-57 °F) and humidity (50-80%) for aging wines. The system has a backup battery for power failures and can store red and white wines at different temperatures. The fo

sales-type lease

Sales-type leases and direct financing leases are two of the classifications of leases described in FASB codification, from the standpoint of the lessor. Compare and contrast a sales-type lease with a direct financing lease as follows: Gross investment in the lease. Amortization of unearned interest income. Manuf

Four Criteria to Be Treated as a Capital Lease

What are the four criteria used for determining if a lease is to be treated as a capital lease? Discuss the income statement and balance sheet implications of both a capital lease and an operating lease.

Managerial finance multiple choice questions

Problem: A currency trader observes the following quotes in the spot market: 1 U.S. dollar = 10.875 Mexican pesos 1 British pound = 3.955 Danish kro ...there is moreshow problem A currency trader observes the following quotes in the spot market: 1 U.S. dollar = 10.875 Mexican pesos 1 British pound = 3.955

Breakeven analysis and Degree of Operating leverage

See attachment. 1. Breakeven Analysis. The Midtown Filling Station is a gasoline retailer in Denton, Texas. Louie DePalma, proprietor of Midtown, has decided to prepare a financial analysis of the potential of a 24-hour convenience store operation. Opening such a center would require remodeling the filling station and the h

Lessee Entries and Balance Sheet Presentation; Capital Lease

January 1, 2008 Doss Company contracts to lease equipment for 5 years, agreeing to make a payment of $94,732 (including the executory costs of 6,000 a year) at the beginning of each year, starting January 1, 2008. The taxes, the insurance, and the maintenance, estimated at $6000 per year, are the obligations of the lessee. The

Lease or Buy Problem

Sandia Meadows, Inc wants to install $2.8 million of new equipment to update its ski lifts. The company can obtain a bank loan for 100% of the purchase price or it can lease the equipment. Assume the following: .The machinery falls into the MACRS 3 year class .Estimated maintenance expenses are $90k per year, payable at the

GAAP, Historical Cost, Basis of Accounting; Financial Statements

Part I. Discuss each of the following terms. Your discussion should expand on the definition as given in the course terms. Explain why this concept is important to financial statements. A. Generally Accepted Accounting Principles. B. Historical Cost. C. Accrual Basis vs. Cash Basis Accounting. D. Current Assets and

Andiola Corporation Lease vs. Buy: Calculate costs, advantage

Andiola Corporation is evaluating whether to lease or purchase equipment. Its tax rate is 30 percent. If the company purchases the equipment for $1,000,000 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 beg

Finance: Beryl's Iced Tea machine, continue to rent, buy, buy new machine

Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $20,000 per year in ongoing maintenance expense.

Determining the present value of the lease

On January 1, 2010, Hershey Co. leased a machine for 5 years at an annual rental of $64,000, payable on the date of signing the lease and each December 31 thereafter. The machine has an estimated useful life of 8 years and no salvage value. Hershey Co. has an option to purchase the machine for $1at the end of the lease. The mark

Journal entries - noncancellable lease agreement (Carey, Inc.)

On January 1, 2010, Carey, Inc., entered into a noncancellable lease agreement, agreeing to pay $5,857 at the end of each year for 2 years to acquire a new computer system having a market value of $9,900. The expected useful life of the computer system is also 2 years, and the computer will be depreciated on a straight-line basi

IFRS: lease classification

IFRS: lease classification Airway leasing entered into an agreement to lease aircraft to Ouachita airlines. Consider each of the following a-e to be independent scenarios. A: The agreement calls for ownership of the aircraft to be transferred to Ouachita Airlines at the end of the lease term. B: the fair value of the aircraft

Prepare a Statement of Cash Flows

6-10. The Village of Parry reported the following for its Print Shop Fund for the year ended April 30, 2009. VILLAGE OF PARRY-PRINT SHOP FUND Statement of Revenues, Expenses, and Changes in Net Assets For the Year Ended April 30, 2009 Operating revenues: Charges for services $1,000,000 Operating expenses: Salaries a

Accounting Treatment for Operating Lease

Maris Co. purchased a machine on January 1, 2011, for $1,000,000 for the express purpose of leasing it. The machine is exprected to have a five-year life, no salvage value, and be depreciated in a straight line monthly basis. On April 1, 2011, under a cancelable lease, Maris leased the machine to Dunbar Company for $300,000 a

WACC, Projected Dividends, Borrowing Cost, NAL, Equipment Lease

PROBLEM SETS: PLEASE SHOW ALL WORK IN EXCEL & EXPLAIN INPUT VARIABLES. 1. ABC has an unleveraged required return of 45%. ABC rebalances its capital structure each year to a target of L = .55. T* = .15. ABC can borrow currently at a rate of rd = 11%. What is ABC's WACC? 2. ABC has made a bundle selling software and has be

Recording Lease as Capital Lease

Snappy Corporation enters into a lease agreement with Long Leasing. Long requires that the lease qualify as a sale. Snappy can fill this requirement by either guaranteeing the residual value itself or having a third party guarantee the residual value. Self-guarantee of the residual value will result in a capital lease to Snappy.

Practice Problem

Problem 9-10 Contingent Liabilities Several items are listed for which the outcome of events is unknown at year-end. a. A company offers a two-year warranty on sales of new computers. It believes that 4% of the computers will require repairs. b. The company is involved in a trademark infringement suit. The company's legal exp

Capital lease amortization and journal entries -

Capital lease amortization and journal entries. Hughey Co. as lessee records a capital lease of machinery on January 1, 2011. The seven annual lease payments of $350,000 are made at the end of each year. The present value of the lease payments at 10% is $1,704,000. Hughey uses the effective-interest method of amortization and s