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Question - On January 1, Smith Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to Smith. The equipment cost Smith P350,000 and has an expected useful life of six years. Its normal sales price is P350,000. The residual value after four years is P50,000. Lease payments are due on December 31 of each year, beginning with the first payment at the end of the first year. The interest rate is 5%.
a) In the point of view of the lessee, how much is the balance of lease liability at the end of the second year?
b) From the point of view of the lessor, the net effect on asset of its journal entry in the second year is?
c) Calculate the balance of lease receivable at the end of the second year (Round your answer to the nearest whole peso amount. And the present value factors are up to 5 decimal places)
d) How much is the interest income of the lessor in the third year?
e) The balance of ROU Asset at the end of the second year?
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: - Explain the goals and uses of special journals.
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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.
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