Homework Solutions - Ch 15

Homework Solutions - Ch 15 - Exercise 15-1 (a)...

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Exercise 15-1 (a) Nath-Langstrom Services, Inc. (Lessee) June 30, 2006 Rent expense . ................................. 10,000 Cash . .......................................... 10,000 December 31, 2006 Rent expense . ................................. 10,000 Cash . .......................................... 10,000 (b) ComputerWorld Corporation (Lessor) June 30, 2006 Cash . .............................................. 10,000 Rent revenue . ............................. 10,000 December 31, 2006 Cash . .............................................. 10,000 Rent revenue . ............................. 10,000 Depreciation expense ($90,000 ÷ 6 years) 15,000 Accumulated depreciation . ........ 15,000
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Exercise 15-8 1. Calculation of the present value of lease payments $562,907 x 5.32948 Φ = $3,000,000 (rounded) Φ present value of an annuity due of $1: n=6, i=5% 2. Liability at December 31, 2006 Initial balance, June 30, 2006 . ................................. $3,000,000 June 30, 2006 reduction . .......................................... (562,907)* Dec. 31, 2006 reduction . .......................................... (441,052) ** December 31, 2006 net liability . ............................. $1,996,041 Asset at December 31, 2006 Initial balance, June 30, 2006 . ................................. $3,000,000 Accumulated depreciation at Dec. 31, 2006 . ........... (500,000) ** December 31, 2006 . ........................................... $2,500,000 3. Expenses for year ended December 31, 2006 June 30, 2006 interest expense . ............................... $ 0* Dec. 31, 2006 interest expense . ............................... 121,855 ** Interest expense for 2006 . ........................................ $121,855 Depreciation expense for 2006 . ............................... 500,000 Total expenses . ...................................................... $621,855 Calculations: June 30, 2006* Leased equipment (calculated in req. 1) ........................... 3,000,000 Lease payable (calculated in req. 1) .............................. 3,000,000 Lease payable ................................................................. 562,907 Cash (rental payment) ................................................... 562,907 December 31, 2006** Interest expense (5% x [$3 million – 562,907]) ................ 121,855 Lease payable (difference) ............................................... 441,052 Cash (rental payment) ................................................... 562,907 Depreciation expense ($3 million / 3 years x ½ year) . ... 500,000 Accumulated depreciation . ......................................... 500,000
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Exercise 15-9 1. Receivable at December 31, 2006 Receivable – Unearned = Net Rec. Interest
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This note was uploaded on 09/27/2008 for the course BUS 1000 taught by Professor Professor during the Spring '08 term at Cal Poly.

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Homework Solutions - Ch 15 - Exercise 15-1 (a)...

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