Compute the effect on income before income taxes

Assignment Help Accounting Basics
Reference no: EM132891986

Problem - Comparisons of Operating and Sales-Type Leases - On January 1, 2019, Nelson Company leases certain property to Queens Company at an annual rental of $60,000 payable in advance at the beginning of each year for 8 years. The first payment is received immediately. The leased property, which is new, cost $275,000 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 associated with this lease. It should have accounted for this lease as a sales-type lease but mistakenly treated it as an operating lease.

Required - Compute the effect on income before income taxes during the first year of the lease as a result of Nelson's classification of this lease as an operating rather than a sales-type lease. Round your answer to the nearest dollar.

Reference no: EM132891986

Questions Cloud

How would create a vision for work : How you would create a vision for your work? Kirk (2019) notes the importance of formulating your brief. What does he mean by this?
Prepare journal entries for ramsey : Prepare journal entries for Ramsey (the lessor) to record the lease contract on March 1, 2019, the receipt of the first two lease rentals
Transformational leadership model : In the transformational leadership model, we learn how important it is for a leader to articulate his or her vision to others.
Describe two cryptocurrencies with applicable examples : Describe at least two cryptocurrencies with applicable examples. Discuss some similarities and differences. Lastly, discuss if you have any experience
Compute the effect on income before income taxes : Compute the effect on income before income taxes during the first year of the lease as a result of Nelson's classification of this lease
Discuss issue and provide different examples of component : MPEG 21 is organized into several independent parts to allow various slices of the technology. Discuss this issue and provide five different examples
Replaced by mobile and smart technologies : Do you foresee that the traditional computer will be replaced by mobile and smart technologies as a primary device form factor in the near future?
Calculate the amount of the asset and liability of sax : The computers have an estimated life of 5 years, a fair value of $300,000, and a zero estimated residual value. Calculate the amount of the asset and liability
Describe michael porter five forces model : Explain why management might take these two different approaches (Theory X and Theory Y) in managing a workforce. Describe Michael Porter's Five Forces Model.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd