ORIE_350_Homework__6_spring_2008

ORIE_350_Homework__6_spring_2008 - ORIE 350 Homework #6 Due...

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ORIE 350 Homework #6 Due March 5, 2008 1. Camelrock Corporation reported the following relating to a lease transaction on its December 31, 2004 balance sheet (the company entered into the lease transaction on January 1, 2004): Leased Asset – Gross \$143,900 Less: Accumulated Depreciation (23,983) Leased Asset – Net \$119,917 Lease Liability \$126,168 Assuming that (1) the firm depreciates the leased asset on a straight-line basis over the term of the lease, (2) the interest rate for the lease transaction is 12 percent, (3) balance sheet numbers are rounded to the nearest dollar, and (4) lease payments occur at December 31 of each year, compute: a. the term of the lease b. the interest expense for the year 2004 c. the amount of each lease payment d. the total of depreciation expense and interest expense for the year 2005 e. the balance of the lease liability on December 31, 2005 2. Velde Inc. leases a computer system from Cogitoergosum Enterprises. The value of the system is known to be approximately \$50,000. The useful life of the system is four years. Velde will return the computer system to Cogitoergosum at the end of the lease term, at which time the system will have a residual value of \$5,000. Velde will make

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This note was uploaded on 04/05/2009 for the course ORIE 350 taught by Professor Callister during the Summer '08 term at Cornell University (Engineering School).

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ORIE_350_Homework__6_spring_2008 - ORIE 350 Homework #6 Due...

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