ACC 309 Final Project Part II.docx - ACC 309 Final Project Part II Management Brief[Wikendy Augustin Southern New Hampshire University A capital lease

ACC 309 Final Project Part II.docx - ACC 309 Final Project...

This preview shows page 1 - 3 out of 4 pages.

ACC 309 Final Project Part II: Management Brief [Wikendy Augustin] Southern New Hampshire University
Image of page 1
A capital lease is a contract allowing a renter to have temporary use of an asset, and such a lease has the economic characteristics of asset ownership for accounting purposes. In this case Peyton Approved, at the beginning of the term would record an asset and a liability equal to the present value of the lease payments. A lease gives the lease a temporary asset and thus it increases assets for the company. A capital lease is different than an operating lease as the lease has to account for executor cost. These costs lower net income which could lead to lower taxes for the company. Peyton Approved breaks down its lease payments and interest into monthly payments of $20,000 for 6 years which is the term of the lease with an interest rate of 5%. The total capital lease obligation is $106,859.53 . Peyton Approved would record the remaining lease payments as a liability and the equipment as an asset. The company would need to deduct the
Image of page 2
Image of page 3

You've reached the end of your free preview.

Want to read all 4 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes