menu
bartleby
search
close search
Hit Return to see all results
Subscribe
Sign in

Business
AccountingIntermediate Accounting: Reporting And Analysis3rd Edition

close solutoin list
Chapter 20, Problem 5E
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
Problem 1GI
Problem 2GI
Problem 3GI
Problem 4GI
Problem 5GI
Problem 6GI
Problem 7GI
Problem 8GI
Problem 9GI
Problem 10GI
Problem 11GI
Problem 12GI
Problem 13GI
Problem 14GI
Problem 15GI
Problem 16GI
Problem 17GI
Problem 1MC
Problem 2MC
Problem 3MC
Problem 4MC
Problem 5MC
Problem 6MC
Problem 7MC
Problem 8MC
Problem 9MC
Problem 10MC
Problem 1RE
Problem 2RE
Problem 3RE
Problem 4RE
Problem 5RE
Problem 6RE
Problem 7RE
Problem 8RE
Problem 9RE
Problem 1E
Problem 2E
Problem 3E
Problem 4E
Problem 5E
Problem 6E
Problem 7E
Problem 8E
Problem 9E
Problem 10E
Problem 11E
Problem 12E
Problem 13E
Problem 14E
Problem 15E
Problem 1P
Problem 2P
Problem 3P
Problem 4P
Problem 5P
Problem 6P
Problem 7P
Problem 8P
Problem 9P
Problem 10P
Problem 11P
Problem 12P
Problem 1C
Problem 2C
Problem 3C
Problem 4C
Problem 5C
Problem 6C
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
15 views

Comparisons of Operating and Sales-Type Leases On January 1, 2019, Nelson Company leases certain property to Queens Company at an annual rental of $60,000 payable in advance at the beginning of each year for 8 years. The first payment is received immediately. The leased property, which is new, cost $275,000 and has an estimated economic life of 8 years and no residual value. The interest rate implicit in the lease is 12% and the lease is noncancelable. Nelson had no other costs associated with this lease. It should have accounted for this lease as a sales-type lease but mistakenly treated it as an operating lease.

Required:

Next Level Compute the effect on income before income taxes during the first year of the lease as a result of Nelson’s classification of this lease as |in operating rather than a sales-type lease. Round your answer to the nearest dollar.

To determine

Analyse the effect on net income before income taxes during the first year of the lease.

Explanation

Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of time is provided by the owner of the asset to the user of the asset. The owner, who possesses the asset, is termed as ‘Lessor’ and user, to whom the right is transferred to, is termed as ‘Lessee’.

Sale type Lease: In a Sales-Type lease, the lessor sells the asset to the lessee and records a receivable. In this type of lease, the lessor records a dealer’s or manufacturer’s profit or loss depending upon the difference between the fair value of the asset and the carrying value of the asset.

Analyse the effect on net income before income taxes during the first year of the lease:

Determine the sales amount and the cost of leased asset:

Sales = PV factor for 8 payments at 12%×Lease payment receivable         = 5.563757(as per present value table)×$60,000         = $333,825

Cost of the leased asset = Cost of the property                                      = $275,000

Determine the interest revenue of the lease:

Interest Revenue-Leases= 12%× (Lease receivables − Initial payment)= 12%× ($333,825.42−$60,000)= 12%×$273,825

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution
arrow_back
Chapter 20,
Problem 4E
Chapter 20,
Problem 6E
arrow_forward

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Chapter 20 Solutions

Show all chapter solutions add
Ch-20 P-1GICh-20 P-2GICh-20 P-3GICh-20 P-4GICh-20 P-5GICh-20 P-6GICh-20 P-7GICh-20 P-8GICh-20 P-9GICh-20 P-10GI
Ch-20 P-11GICh-20 P-12GICh-20 P-13GICh-20 P-14GICh-20 P-15GICh-20 P-16GICh-20 P-17GICh-20 P-1MCCh-20 P-2MCCh-20 P-3MCCh-20 P-4MCCh-20 P-5MCCh-20 P-6MCCh-20 P-7MCCh-20 P-8MCCh-20 P-9MCCh-20 P-10MCCh-20 P-1RECh-20 P-2RECh-20 P-3RECh-20 P-4RECh-20 P-5RECh-20 P-6RECh-20 P-7RECh-20 P-8RECh-20 P-9RECh-20 P-1ECh-20 P-2ECh-20 P-3ECh-20 P-4ECh-20 P-5ECh-20 P-6ECh-20 P-7ECh-20 P-8ECh-20 P-9ECh-20 P-10ECh-20 P-11ECh-20 P-12ECh-20 P-13ECh-20 P-14ECh-20 P-15ECh-20 P-1PCh-20 P-2PCh-20 P-3PCh-20 P-4PCh-20 P-5PCh-20 P-6PCh-20 P-7PCh-20 P-8PCh-20 P-9PCh-20 P-10PCh-20 P-11PCh-20 P-12PCh-20 P-1CCh-20 P-2CCh-20 P-3CCh-20 P-4CCh-20 P-5CCh-20 P-6C

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Which document is used by the cost accounting department to allocate direct labor charges to work in process?

Accounting Information Systems

JOURNALIZING PURCHASES RETURNS AND ALLOWANCES AND POSTING TO GENERAL LEDGER AND ACCOUNTS PAYABLE LEDGER Using p...

College Accounting, Chapters 1-27

Domino's Pizza: Franchise segment return on investment Domino's Pizza, Inc. is the second-largest pizza chain i...

Financial & Managerial Accounting

Bank reconciliation An accounting clerk for Chesner Co. prepared the following bank reconciliation: Chesner Co....

Corporate Financial Accounting

Stock investment transactions, equity method and available-for-sale securities Glacier Products Inc. is a whole...

Accounting

Transactions related to revenue and cash receipts completed by Sycamore Inc. during the month of March 20Y8 are...

Financial Accounting

Standards set by engineering studies a. can determine the most efficient way of operating. b. can provide rigor...

Managerial Accounting: The Cornerstone of Business Decision-Making

Lead time reduction for an insurance company Shield Insurance Company takes 10 days to make payments on insuran...

Financial And Managerial Accounting

(Market Structures) Determine whether each of the following is a characteristic of perfect competition, monopol...

ECON: MICRO4 (New, Engaging Titles from 4LTR Press)

What is a systems flowchart?

Accounting Information Systems

Contrast the focus of marketing activities during the five eras of marketing history.

Contemporary Marketing

Governments may intervene in a market economy in order to a. protect property rights. b. correct a market failu...

Essentials of Economics (MindTap Course List)

FOREIGN INVESTMENT ANALYSIS After all foreign and U.S. taxes, a U.S. corporation expects to receive 2 pounds of...

Fundamentals of Financial Management (MindTap Course List)

You have just completed an exciting employment interview, and you want the interviewer to remember you favorabl...

Essentials of Business Communication (MindTap Course List)

In 1960 a U.S. dollar sold for 620 Italian lire. 1f PPP held in 1960, what would the PPP value of the exchange ...

Economics:

The first principle of economics discussed in Chapter 1 is that people face trade-offs. Use a production possib...

Principles of Microeconomics (MindTap Course List)

(Law of Diminishing Marginal Utility) Complete each of the following sentences: a. Your tastes determine the __...

ECON MICRO

Why do economists make assumptions?

Brief Principles of Macroeconomics (MindTap Course List)

Make up an example of a monthly supply schedule for pizza, and graph the implied supply curve. Give an example ...

Principles of Economics (MindTap Course List)

Would the yield spread on a corporate bond over a Treasury bond with the same maturity tend to become wider or ...

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

J.D. Power and Associates surveys new automobile owners to learn about the quality of recently purchased vehicl...

STATISTICS F/BUSINESS+ECONOMICS-TEXT

Identify the types of consumer buying decisions and discuss the significance of consumer involvement

MKTG 12:STUDENT ED.-TEXT

What is a market? What are the characteristics of a perfectly competitive market?

Principles of Macroeconomics (MindTap Course List)

Give an example of an adverse supply shock and illustrate graphically. Now do the same for a beneficial supply ...

ECON MACRO

Is it a good strategy to focus most marketing efforts on the most profitable customers?

Foundations of Business (MindTap Course List)

Which Of the four components Of emotional intelligence do you consider most important to an effective manager i...

Management, Loose-Leaf Version

Journalize the adjusting entries from the partial work sheet for Newkirk Company as of September 30.

College Accounting (Book Only): A Career Approach

Cost per equivalent unit: average cost method The following information concerns production in the Forging Depa...

Financial & Managerial Accounting

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receiv...

Financial Accounting

Bank reconciliation Identify each of the following reconciling items as: (a) an addition to the cash balance ac...

Accounting (Text Only)

STRAIGHT-LINE DEPRECIATION A computer was purchased on January 1 at a cost of 5,000. It has an estimated useful...

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

a. Describe the entries that have been posted to the following accounts after the Change Fund was established. ...

College Accounting (Book Only): A Career Approach

Foreign Affairs magazine conducted a survey to develop a profile of its subscribers (Foreign Affairs website, F...

Statistics for Business & Economics, Revised (MindTap Course List)

Using supply and demand curves, show the effect of each of the following events on the market for wheat: a. The...

Exploring Economics

The benefit of diversification when constructing a portfolio is that it can eliminate a. speculative bubbles. b...

Principles of Macroeconomics (MindTap Course List)

Comprehensive/Spreadsheet Problem 17-18 MULTINATIONAL FINANCIAL MANAGEMENT Yohe Telecommunications is a multina...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

RECAPITALIZATION Tapley Inc. currently has total capital equal to 5 million, has zero debt, is in the 40% feder...

Fundamentals of Financial Management (MindTap Course List)

Describe the who, what, where, and how of the following scenario: A customer gives his purchase to a sales cler...

Pkg Acc Infor Systems MS VISIO CD

Financial information Yahoo.com’s (YHOO) finance Internet site provides summary financial information about pub...

Survey of Accounting (Accounting I)

Horizontal analysis of income statement For 20Y2, Macklin Inc. reported a significant increase in net income. A...

Corporate Financial Accounting

In September 2019, Painter Wax Corporation began operations in a state that requires new employers of one or mo...

PAYROLL ACCT.,2019 ED.(LL)-TEXT

Put forth two observations that are inconsistent with the costbenefit theory of burglary discussed in the chapt...

Macroeconomics

The file P02_26.xlsx lists sales (in millions of dollars) of Dell Computer during the period 1987-1997 (where y...

Practical Management Science

In each of the sentences below, choose the correct verb in parentheses. Only one of the free smartphone applica...

Bcom

In general, systems are described by the following pattern: (1) interrelated parts, (2) processes, and (3) obje...

Cornerstones of Cost Management (Cornerstones Series)

Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract sub...

Purchasing and Supply Chain Management

In Exhibit 14, if there is a shortage of video games of 200 units, the current price of video games must be a. ...

Economics For Today

Suppose the landmass known to you as the United States of America had been composed, since the nations founding...

Microeconomics

Why does the market fail to produce nonexcludable public goods?

Economics (MindTap Course List)

bartleby
© bartleby 2019