Reference no: EM131256779
On June 30, 2016, Georgia-Atlantic, Inc., leased a warehouse facility from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $583,573 over a 4-year lease term, payable each June 30 and December 31, with the first payment at June 30, 2016. Georgia-Atlantic's incremental borrowing rate is 11.0%, the same rate Builders used to calculate lease payment amounts. Builders constructed the warehouse at a cost of $3.4 million. (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
1. Determine the price at which Builders is “selling” the warehouse (present value of the lease payments) at June 30, 2016.
2. What pretax amounts related to the lease would Builders report in its balance sheet at December 31, 2016?
3. What pretax amounts related to the lease would Builders report in its income statement for the year ended December 31, 2016?
|
Accounts receivable comes before equipment
: The accounts of Lake Oaks Pool Service, Inc., follow with their normal balances at April 30, 2014. The accounts are listed in no particular order. Prepare the company’s trial balance at April 30, 2014, listing accounts in proper sequence, as illustra..
|
|
Events on the accounting equation of the medical practice
: Dr. Rebecca Gray opened a medical practice specializing in physical therapy. During the first month of operation (January), the business, titled Dr. Rebecca Gray, Professional Corporation (P.C.), experienced the following events: Analyze the effects ..
|
|
The furniture is produced in two separate factories
: Smythe-Klink, Inc. is a manufacturer of outdoor furniture. The furniture is produced in two separate factories where materials are entered at the beginning of the first process. Labor and overhead costs are incurred evenly throughout all processes. I..
|
|
Prepare an unadjusted trial balance at the end of february
: Barbara Jones opened Barb’s Book Business on February 1. Received shareholders’ cash contributions on February 1 totaling $23,000 to form the corporation; issued 1,000 shares of common stock. You have been hired to maintain the company’s financial re..
|
|
Determine price at which builders is selling the warehouse
: On June 30, 2016, Georgia-Atlantic, Inc., leased a warehouse facility from Builders, Inc. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $583,573 over a 4-year lease term, payable each June 30 and December 31, wit..
|
|
What pretax amounts related to lease
: On June 30, 2016, Georgia-Atlantic, Inc., leased a warehouse facility from IC Leasing Corporation. The lease agreement calls for Georgia-Atlantic to make semiannual lease payments of $559,700 over a four-year lease term, payable each June 30 and Dece..
|
|
What tax rate would he be indifferent between the bonds
: Mitch is currently considering investing in municipal bonds that earn 8.40 percent interest, or in taxablebonds issued by the coca cola company that pay 11.2 percent. At what tax rate would he be indifferent between the bonds?
|
|
Capital account in partnership at the end of the tax year
: Partner Q is a partner in Partnership QRST. The partnership agreement states that Q's share of income and losses is 30 percent. Q provides services to QRST. Both QRST and Q use a calendar year for tax purposes. Calculate Q's taxable income for the ta..
|
|
Should the advertising budget be increased
: The marketing manager argues that a $9,500 increase in the monthly advertising budget would increase monthly sales by $22,500. Calculate the increase or decrease in net operating income. Should the advertising budget be increased?
|