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

  What are the totals for debit balances and the credit

abbott company had the following accounts and balances at december 31 2012. all accounts have normal balances.accounts

  Discussing the format of the statement of cash flows

Helen Powell and Paul Tang were discussing the format of the statement of cash flows of Baumgarten Co. At the bottom of Baumgarten's statement of cash flows.

  During 2012 nova inc made several treasury stock

during 2012 nova inc. made several treasury stock transactions. for each of the following give the entrys that nova

  Explain why some markets are developing faster than others

Market size, location, and openness to trade can help explain why some markets are developing faster than others. In your opinion, what trade theories support the recent rise of China and India on the global stage? Explain your views in detail...

  Evaluating a project that costs

We are evaluating a project that costs $800,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 60,000 units per year. Price per unit is $40,..

  Prepare the production budget

Sales are projected to be 80,000 for July, 95,000 for August and 60,000 for September. Prepare the production budget

  Discuss respectively in a partnership

Seth and Beth have original investments of $50,000 and $100,000 respectively in a partnership

  Determine the issue price of the debt

On January 1, 2018, Modine Technology, Incorporated issued $840,000 of $1,000 par value, Determine the issue price of the debt

  What is the income reported by regal

What is the income reported by Regal during 2012 pertaining to the Air investment?

  Sarah contributes 25000 to a church sarahs marginal tax

sarah contributes 25000 to a church. sarahs marginal tax rate is 35 while her average tax rate is 25 after considering

  Calculate the cost of goods sold under the fifo

March 1: Beginning Inventory 65 Units @ $60/unit. Calculate the cost of goods sold under the FIFO, LIFO, and Weighted Average methods

  What is the purpose of the statement of owner equity

Give two examples of expenses a business might incur.

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