User Account

All Pages

The estimated economic life of the machine

Assignment Help Accounting Basics
Reference no: EM13867114

On January 1, 2010, Von Company entered into two noncancelable leases for new machines to be used in its manufacturing operations. The first lease does not contain a bargain purchase option. The lease term is equal to 80% of the estimated economic life of the machine. The second lease contains a bargain purchase option. The lease term is equal to 50% of the estimated economic life of the machine.

Required:
1. Explain the theoretical basis for requiring lessees to capitalize certain long-term leases. Do not discuss the specific criteria for classifying a lease as a capital lease.
2. Explain how a lessee should account for a capital lease at its inception.
3. Explain how a lessee should record each minimum lease payment for a capital lease.
4. Explain how Von should classify each of the two leases. 

Reference no: EM13867114

Questions Cloud

The nature of the expenditure : State with The reason The nature of the Expenditure in Each of the Following Case:-a) Freight on The New machinery Rs-4000 & Its Installation Cost Rs-2000
What this means in a global context : The issue of responsibility is foundational to understanding organizational ethics Explain what this means in a global context.
Occupational safety and health act : The Occupational Safety and Health Act (OSHA) requires employers to do all of the following EXCEPT
Bribery when doing business in the executive, country. : TI asked 3,016 senior business executives in 28 countries around the world for their perceptions of the likelihood of companies, from countries they have business dealings with, to engage in bribery when doing business in the executive, country.
The estimated economic life of the machine : On January 1, 2010, Von Company entered into two noncancelable leases for new machines to be used in its manufacturing operations. The first lease does not contain a bargain purchase option. The lease term is equal to 80% of the estimated economic li..
Global supply chain re-engineering : Analyze the differences between the current supply chain and the proposed turnkey strategy.
Where does leadership fit into the picture : Think of an organization that has been in existence for as long as you can remember. A Fortune 500 company for example. Why and how has the company managed to survive all the years despite radical growth in technology, political changes, and econo..
What do the numbers on the vertical axis represent : What do the numbers on the bottom of the chart represent and what do the numbers on the vertical axis represent?
Discuss this problem as a class and draw up an action plan : Assume that you are part of a management team of a medium-size business that sells goods to consumers online. You know that your system was recently hacked, and that accounts and customer information may have been stolen. How do you respond to the si..

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

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

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

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.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd