Comparisons of operating and sales type leaseson january 1

Assignment Help Taxation

Reference no: EM13348247

Comparisons of Operating and Sales Type Leases

On January 1, 2013 Nelson Company leases get property to Queens Company at an annual rental of $60,000 payable in advance at the starting of each year for 8 years. The first payment is gets immediately. The lease property, which is new, cost $175,000 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 related with this lease. It could have accounted for this lease as a sales type lease but mistakenly treated it as an operating lease.

Determine the effect on income before income taxes during the first year of the lease as a result of Nelson's classification of the lease as an operating rather than a sales type lease.

Reference no: EM13348247

Questions Cloud

Question 1the effect of a hazardous substance depends on : question 1the effect of a hazardous substance depends on the concentration of the substance that is present in the

Questionluke valued and sold at 210000 his original basis : questionluke valued and sold at 210000. his original basis in the land was 180000.for the land luke received 60000 in

Tiger computers inc of singapore is taking the purchase of : tiger computers inc. of singapore is taking the purchase of an automated etching machine for use in the production of

You are trying to evaluate how much money your company xyz : you are trying to evaluate how much money your company xyz corporation will need to borrow from the bank if any. you

Comparisons of operating and sales type leaseson january 1 : comparisons of operating and sales type leaseson january 1 2013 nelson company leases get property to queens company at

Question 1a handling operations for solidpowder substances : question 1a handling operations for solidpowder substances are often a source of dust generation and are a source of

Questionlessee accounting with payments made at starting of : questionlessee accounting with payments made at starting of yearadden company starts a lease agreement dated january 1

Question use word processor software to compute the audit : question use word processor software to compute the audit report you believe could be appropriate for a certified

Question 1a describe the main purpose of the globally : question 1a describe the main purpose of the globally harmonised system of classification and labelling of chemicalsb

User Account

All Pages