The second question in this case is if the senior accountant’s analysis was correct. From the paragraph above, this lease should be classified as a finance lease. The senior accountant correctly classified this lease as a finance lease. However, the senior accountant did not use the correct discount rate for the present value calculation of the minimum payments. IAS 17.20 says that the payments should be “discounted…
The lease agreement stipulates Big Bear’s annual lease amount to be increased by the percentage increase in the Consumer Price Index (CPI). Because the lease…
Therefore, the implicit interest rate in the lease is approximately i = 4% per year.…
In order to find out what the minimum monthly payment would be we would have to…
(2) Payback period evaluates how long the project is going to take to reach break-even point.…
Moving out would not be the best option for me because I cannot afford to live the lifestyle I prefer on a minimum wage paycheck. I took to Google to look for an apartment suiting my preferences and found the Langham Apartments, located in Los Angeles, on apartmentguide.com. It costs $1015 monthly to rent a 250 square feet studio room. That would only leave me with $378.15 for other expenses. After calculating the bills for my utilities and other services, the total comes out to be $162 for gas, electricity, water, home phone, wi-fi, and cell phone. In the situation involving the Langham Apartments, my rental fee does cover my utility bills for gas, electricity,…
The fixed coverage charge ratio measures the payments with the leases and refers to the…
At the inception of the lease, the lease is classified either as an operating or finance lease; as required by paragraph 8 of AASB 117, with the lease classification depending on the substance of the transaction rather than the form of the contract. The key criterion of the finance lease is the transfer of substantially all risks and rewards without the transfer of ownership. The Standard provides examples and indicators of situations that individually or in combination would normally lead to a lease being classified as a finance lease.[2]…
First of all, with an operating lease, the payments received by the lessor are usually…
7. If AAA Leasing Company’s tax rate is 40%, what is the minimum lease payment that it would be willing to accept? Explain.…
The best offer for a lease is $7,200 a year with a total present value of $36,000. The best offer for purchasing a truck is $24,300.…
STATE HOW BOTH COMPANIES SHOULD CLASSIFY THE LEASE. GIVE REASONS FOR YOUR ANSWER. Both Purple Ltd and Lemon Ltd should classify the lease as a finance lease based on the below.…
3) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the…
According to ASC 840-10-25-5, it says “For a lessee, minimum lease payments comprise the payments that the lessee is obligated to make or can be required to make in connection with the leased property, excluding both of the following:…
5. The Lessee shall pay all the Electricity charges and water charges during the lease period with regard to lease premises.…