User Account

All Pages

Transaction is classified appropriately as a capital lease

Assignment Help Accounting Basics
Reference no: EM13867091

On January 1, 2010, Metcalf Company sold equipment for cash and leased it back. As seller lessee, Metcalf retained the right to substantially all of the remaining use of the equipment. The term of the lease is eight years. There is a gain on the sale portion of the transaction. The lease portion of the transaction is classified appropriately as a capital lease.

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. a. Explain how Metcalf should account for the sale portion of the sale leaseback transaction at January 1, 2010.

b. Explain how Metcalf should account for the leaseback portion of the sale leaseback transaction at January 1, 2010.

3. Explain how Metcalf should account for the gain on the sale portion of the sale leaseback transaction during the first year of the lease. 

Reference no: EM13867091

Questions Cloud

Show the necessary journal entries : The Director Decided to rejected the Excess application money on 2000 share as refunded .Show the necessary Journal entries.
Physical and psychological team building activities : Physical and psychological team building activities can be used by project managers. Multiple communication methods can be used suitably while managing projects. Project managers need to be wise when managing people and communicating with them
Estimate the fuel consumption : You are estimating the fuel consumption (gallons per mile) for intermediate armored vehicles based on the horsepower of the vehicle. The vehicle for which you are estimating has 4.29 hundred horsepower.
Adjusting entries affect cash flows in the current period : Adjusting entries affect cash flows in the current period
Transaction is classified appropriately as a capital lease : On January 1, 2010, Metcalf Company sold equipment for cash and leased it back. As seller lessee, Metcalf retained the right to substantially all of the remaining use of the equipment. The term of the lease is eight years. There is a gain on the sale..
Determine the moment of force about hinged : 1. The hood of the automobile is supported by the strut AB, which exerts a force of F = 24 lb on the hood. Find: Determine the moment of this force about the hinged axis y.
Abc ltd produce 100000 units of product x : ABC ltd produce 100000 units of product X during 15-16 per unit Direct cost are as followingRaw materials -10 Production Over head is Rs-200000 out of which 40% Fixed
How might earnings management practices : How might earnings management practices serve to project the managerial style of firms in managing the earnings of the firms?
How do you assess biopure potential in the human market : How do you assess Biopure's potential in the human market? The animal market?calculate the market potential for Oxyglobin (animal market) and Hemopure (human market)

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