Compute the present value of minimum lease payments

Assignment Help Financial Accounting

Reference no: EM131223064

On Jan1, 2008, Burke Corp. signed a 5-year noncancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting Jan. 1, 2008. The machine has an estimataed useful life of 6 years. The machine reverts back to lessor at the end of the lease term. Burke uses the straight-line method of depreciation for all its plant assets. Burke's incremental borrowing rate is 10% and the Lessor's implicit rate is unknown.

Instructions:

1. What type of lease is this? Explain.

2. Compute the present value of the minimum lease payments.

3. Prepare all necessary journal entries for Burk for this lease through Jan. 1, 2009.

Reference no: EM131223064

Questions Cloud

Entity declared cash dividend on its common stock : An entity declared a cash dividend on its common stock on Dec. 15, Year 1, payable on Jan. 12, Year 2. How would this dividend affect equity on the following dates?

Provide a brief summary of the political action committee : Provide a brief summary of the political action committee. Analyze the purpose of this political action committee. Analyze the finances of this political action committee. Overall, do political action committees help or hinder our democracy?

Locate a specific mobile app : Q1. Locate a specific mobile app that currently exists which would significantly benefit your organization (or you personally) and explain why. Include a link to that app

Color a complex planar map using only four colors : You have to color a complex planar map using only four colors, with no two adjacent regions to have the same color. (Map Coloring Problem)

Compute the present value of minimum lease payments : On Jan1, 2008, Burke Corp. signed a 5-year noncancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting Jan. 1, 2008. What type of lease is this? Explain. Compute..

Why is your department best suited to run the given program : How does this program fit into the official mission of your department? Why is your department best suited to run this program? Is this a new program or an existing program?

Describe and explain scenes that apply to the social theme : Explain your interpretation of the meanings of the identified nonverbal communications and symbolism. Summarize how these interpretations are important to the sociological understanding of your chosen social inequality or social class theme. Provid..

Slope of the line that connects : Write a program (in C++) that prompts the user to enter the coordinates of two points (x1, y1) and (x2, y2), and display the slope of the line that connects the two points. Formula of the slope is (y2-y1)/(x2-x1)

What amount must the company include in its gross income : A corporation receives $200,000 from a life insurance policy that is owned on director life. I also had a seller reduce the amount it owed on a purchase by $1,000. Based on these facts, what amount must the company include in its gross income

User Account

All Pages