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Unformatted text preview: 3. Lease contract permits the lessee to purchase the asset at a price that is lower than the fair
4. The present value of the lease payments is 90% or more of the fair market value of the
asset when the lease is signed
Operating lease – a lease which does not meet any of the four criteria Present Value Concepts
- Present value of a single amount – the worth to you today of receiving that amount sometime
in the future
Amount to be received in
PV Factor (obtained
Value PV of $1
1 - - 2 3 An annuity is a series of consecutive payments that are: An equal dollar amount each period Interest periods of equal length (year, half a year, quarter, or month) An equal interest rate each interest period
Present value of an annuity – the value now of a series of equal amounts to be received (or
paid out) for some specified number of periods in the future
Present value of
PV of an annuity Factor
paid/received each period
(obtained from table) PV of an
annuity 1 Annuity
Amount 2 Annuity
Amount 3 Annuity
Amount Accounting 215
Autumn 2013 Notes Payable
On November 1, 2012, Neiman Marcus borrowed $4.8 million cash from Texas Capital Bank for
working capital purposes and signed an interest-bearing note due in six months. The interest rate
was 8 percent per year payable at maturity. The accounting period ends December 31.
1. Give the journal entry to record the note on November 1.
2. Give any adjusting entry required at the end of the annual accounting period.
3. Give the journal entry to record payment of the note and interest on the maturity date,
April 30, 2013.
The ink-jet printing division of Environmental Printing has grown tremendously in recent years.
Assume the following transactions related to the ink-jet division occur during the year ended
December 31, 2012.
1. Environmental Printing was sued for $10 million by Addamax. Plainti...
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This document was uploaded on 02/09/2014.
- Spring '09