Prepare the lease agreement

Assignment Help Business Law and Ethics

Reference no: EM132930

Question :

On January 1, 2010 the Caswell Company signs a 10-year cancelable (at the alternative or either party) agreement to lease a storage building from the Wake Company. The subsequent information pertains to this lease agreement.

1. The agreement needs rental payments of $100,000 at the end of each year.

2. The cost and fair value of the building on 1^st January, 2010 is $2 million.

3. The building has an estimated economic life of 50 years, with no outstanding value. The Caswell Company depreciates same buildings according to the straight-line method.

4. The lease does not hold a renewable option clause. At the termination of the lease, the building reverts to the lessor.

5. Caswell's incremental borrowing rate is 14 percent per year. The Wake Company set the annual rental to make sure a 16% rate of return. (the loss in service value anticipated for the term of the lease)

6. Executory costs of $7,000 yearly, related to taxes on the property, are paid by Wake Company.

Reference no: EM132930

Questions Cloud

Create an employee class with enough numbers : Create an Employee class with enough numbers.

Evaluate clarks tax basis in his kal-el interest : Evaluate Clark's tax basis in his Kal-El interest on December 31, 20X1?

Determine the amount of interest capitalized in 2013 : Determine the amount of interest capitalized in 2013 for the building using the definite interest method.

Contrast the monopolist and the monopolistic firm : Compare and contrast the monopolist and the monopolistic firm Monopolistic competition is an inefficient form of organisation. Discuss

Prepare the lease agreement : Prepare the lease agreement

How enterprise applications differ from traditional systems : What management challenges do organization face in choosing a Database Management System Explain how enterprise applications differ from traditional systems What are the main challenges in adopting hardware and software assets in an organizatio..

Determine the transfer price per pound of recycled aluminum : Determine the transfer price per pound of recycled aluminum. Consider that each division is considered a profit center; could the fabrication manager decide to purchase 10,000 pounds next month from Metalife?

Prepare an income statement for 2012 : Prepare an income statement for 2012 consider that the production-volume variance is written off at year-end as an adjustment to cost of goods sold.

Functions of the safety and health committee : Outline the duties and responsibilities of a registered safety and health officer Outline the composition and functions of the safety and health committee

User Account

All Pages