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Leasing

Linear Programming: Sundown Rent-a-Car

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

25 Short Answer Finance Questions

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

8 multl choice questions on Financial Statement Analysis

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

Alternative Lease

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

Google's operating lease commitments

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.

Property, Plant and Equipment Accounting and Analysis

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.

Lease or Buy Asset; Impact to Ratios and Financials Statements

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

Compute avoidable interest

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.

Lease versus Buy

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

Leasing & Other Asset Based Financing: New Horizon Natural Food

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

MCQ: Define the lease receivable under a direct financing lease

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

Gardial Automation: Should the loom be leased or purchased?

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

Option Pricing, Warrants, Lease or Buy, Duration of Bond

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

CVP Analysis

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

Finance Review- Multiple Choice

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

Restructuring Debt using the settlement of debt method

Individual Assignment: Restructuring Debt Your company is in financial trouble and is in the process of reorganization. Your manager wants to know how you will report on restructuring the debt. Use the following information to help with this assignment. Part A ASSETS CURRENT ASSETS Cash and cash equiva

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

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

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%

Problem

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