Business, 14.05.2021 03:20 beastboy13
On December 31, 2016, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year period ending December 31, 2020, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost Rhone-Metro $365,760 and has an expected useful life of six years. Its normal sales price is $365,760. The lessee-guaranteed residual value at December 31, 2020, is $25,000. Equal payments under the lease are $100,000 and are due on December 31 of each year. The first payment was made on December 31, 2016. Collectibility of the remaining lease payments is reasonably assured, and Rhone-Metro has no material cost uncertainties. Western Soya’s incremental borrowing rate is 12%. Western Soya knows the interest rate implicit in the lease payments is 10%. Both companies use straight-line depreciation.
Required:
1. Show how Rhone-Metro calculated the $100,000 annual lease payments.
2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)? Why?
3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2016.
4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor.
5. Prepare all appropriate entries for both Western Soya and Rhone-Metro on December 31, 2017 (the second lease payment and depreciation).
6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2020 assuming the equipment is returned to Rhone-Metro and the actual residual value on that date is $1,500.
Answers: 1
Other questions on the subject: Business
Business, 22.06.2019 02:30, bellamore
Consider the local telephone company, a natural monopoly. the following graph shows the monthly demand curve for phone services and the company’s marginal revenue (mr), marginal cost (mc), and average total cost (atc) curves. 0 2 4 6 8 10 12 14 16 18 20 100 90 80 70 60 50 40 30 20 10 0 price (dollars per subscription) quantity (thousands of subscriptions) d mr mc atc 8, 60 suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. complete the first row of the following table. pricing mechanism short run long-run decision quantity price profit (subscriptions) (dollars per subscription) profit maximization marginal-cost pricing average-cost pricing suppose that the government forces the monopolist to set the price equal to marginal cost. complete the second row of the previous table. suppose that the government forces the monopolist to set the price equal to average total cost. complete the third row of the previous table. under average-cost pricing, the government will raise the price of output whenever a firm’s costs increase, and lower the price whenever a firm’s costs decrease. over time, under the average-cost pricing policy, what will the local telephone company most likely do
Answers: 2
Business, 22.06.2019 08:30, labrandonanderson00
What is the equity method balance in the investment in lindman account at the end of 2018?
Answers: 2
Business, 22.06.2019 11:10, allieallie
Use the information below to answer the following question. the boxwood company sells blankets for $60 each. the following was taken from the inventory records during may. the company had no beginning inventory on may 1. date blankets units cost may 3 purchase 5 $20 10 sale 3 17 purchase 10 $24 20 sale 6 23 sale 3 30 purchase 10 $30 assuming that the company uses the perpetual inventory system, determine the gross profit for the month of may using the lifo cost method.
Answers: 1
Business, 22.06.2019 11:10, evansh78
Use the following account numbers and corresponding account titles to answer the following question. account no. account title (1) cash (2) merchandise inventory (3) cost of goods sold (4) transportation-out (5) dividends (6) common stock (7) selling expense (8) loss on the sale of land (9) sales which accounts would appear on the income statement?
Answers: 3
You know the right answer?
On December 31, 2016, Rhone-Metro Industries leased equipment to Western Soya Co. for a four-year pe...
Questions in other subjects:
Biology, 31.01.2020 13:49
