Lease liability and balance sheet

Assignment Help Accounting Basics
Reference no: EM13155264

Stockton, Inc. leased machinery with a fair value of $250,000 from Layton Machine Co. on December 31, 2001. The contract is a six-year noncancellable lease with an implicit interest rate of 10 percent. The lease requires annual payments of $50,000 beginning December 31, 2001. Stockton appropriately accounted for the lease as a capital lease. Stockton's incremental borrowing rate is 12 percent. Assuming the present value of an annuity due of 1 for 6 years at 10 percent is 4.7908 and the present value of an annuity due of 1 for 6 years at 12 percent is 4.6048, what is the lease liability that Stockton should report on the balance sheet at December 31, 2001?

A. $189,540

B. $200,000

C. $230,240

D. $239,540

Reference no: EM13155264

Questions Cloud

The value of ss residual : The value of SS residual measures the average squared distance between the actual Y values and the Y values predicted by the regression equation.
Critique of ethics code : If your organization has an existing Code of Ethics, obtain a copy and be prepared to discuss it in this week. If it doesn't, use one from another organization. This code of ethics will be used as the basis for the System of Inquiry assignment.
Find to test claim that proportion with lawn mowers is high : Find the for a test of the claim that the proportion with lawn mowers in Omaha is higher than 65%. Among 497 randomly selected homes.
Meaning of dupont model : Describe the meaning of the DuPont Model of the return on investment (ROI) calculation.
Lease liability and balance sheet : Assuming the present value of an annuity due of 1 for 6 years at 10 percent is 4.7908 and the present value of an annuity due of 1 for 6 years at 12 percent is 4.6048, what is the lease liability that Stockton should report on the balance sheet at..
Calculate the temperature change : Calculate the temperature change which will be caused by the following process: 0.640 moles of NH4Cl are dissolved in 1.00 L of water.
Composite sampling is a way to reduce laboratory : Composite sampling is a way to reduce laboratory testing costs. A public health department is testing for possible fecal contamination in public swimming pools
Explain what is effective diffusion coefficient of ch4 : What is effective diffusion coefficient of CH4 in the nanochannel at the feed gas conditions? Is Knudsen diffusion important?
What is the new pressure in the bicycle tire : A bicycle tire is filled with air to a pressure of 85.0 psi at a temperature of 19°C. Riding the bike on asphalt on a hot day increases the temperature of the tire to 58°C. The volume of the tire increases by 2.8%. What is the new pressure in the ..

Reviews

Write a Review

Accounting Basics Questions & Answers

  Accounts receivable to cover probable adjustments

Winkler Financing assesses a finance charge of 2% of the amount of accounts receivable and also reserves an amount equal to 4% of accounts receivable to cover probable adjustments.

  Are there any associated implications for the profession

Many people believe that an auditor cannot be truly independent when the client pays the audit fees. Can you think of any possible solutions or approaches that might reduce this apparent lack of independence?

  Distinguish between nominal and effective interest rates

Distinguish between nominal and effective interest rates. Explain the nature of the $100,000 difference between the face value and the market value of the bonds on January 1

  Rules-based accounting standards

Explain how "rules-based" accounting standards differ from "principles-based" standards. How might fundamentally changing accounting standards from bright-line rules to principle-based standards help prevent another Enron-like fiasco in the future..

  Why is accounting for contributions so critical

Why is accounting for contributions so critical for a not-for-profit entity? For example, what complications can arise if a donor places conditions on a pledged contribution or imposes restrictions on the use of the money by the organization? What..

  Statements regarding accounts payable

Which of the following is true about accounts payable?

  Journal entry to record retirement of bonds

A company previously issued $2,000,000, 10% bonds, receiving a $120,000 premium. On the current year's interest date, after the bond interest was paid and after 40% of the total premium had been amortized, the company purchased the entire bond iss..

  Calculating taxable income related to the machines for 2011

Tan Company acquires a new machine (ten-year property) on January 15, 2011, at a cost of $200,000. Tan also acquires another new machine (seven-year property) on November 5, 2011, at a cost of $40,000.

  Accounting for troubled debt restructuring

Ludwig, Inc., which owes Giffin Co. $2,400,000 in notes payable, is in financial difficulty. To eliminate the debt, Giffin agrees to accept from Ludwig land having a fair value of $1,830,000 and a recorded cost of $1,350,000.

  Determining audition and sampling

What are some ways that auditors can be sure that the sample sizes will be fair enough to provide a look at internal controls, yet comprehensive enough to detect any irregularities? Is there a way?

  Journal entries for bond issuance-interest-amortization

Please describe how to prepare necessary journal entries to record the issuance of bonds, the periodic interest, and amortization of bond premiums and discounts.

  Prepare journal entries to record events-debt service funds

a) Prepare journal entries to record the events above in the debt service fund. b) Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2008

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