User Account

All Pages

What should be the income reported by garfield

Assignment Help Accounting Basics
Reference no: EM131734442

Question - On January 1, 2012, Garfield Corp (lessor) entered into a noncancellable lease agreement with Odie Corp (lessee) for machinery which was carried in Garfield's accounting records at $2,265,000 and had a market value of $2,400,000. Minimum lease payments under the lease agreement, which expires on December 31, 2021, total $3,550,000. Payments of $355,000 are due each January 1. The first payment was made on January 1, 2012 when the lease agreement was finalized. The interest rate of 10% which was stipulated in the lease agreement is the implicit rate set by the lessor. The effective interest method is being used. Odie expects the machine to have a ten- year life with no residual value, and be depreciated on a straight-line basis. Collectibility of the rentals is reasonably assured, and there are no important uncertainties surrounding the costs yet to be incurred by Garfield. Both entities are small private corporations that follow ASPE.

Instructions

(a) From the lessee's viewpoint, what kind of lease is the above agreement? From the lessor's viewpoint, what kind of lease is the above agreement?

(b) Ignoring income taxes, what should be the income reported by Garfield from the lease for the year ended December 31, 2012?

(c) Ignoring income taxes, what should be the expenses incurred by Odie from this lease for the year ended December 31, 2012?

(d) What journal entries should be recorded by Odie Corp on January 1, 2012?

(e) What journal entries should be recorded by Garfield Corp on January 1, 2012?

Reference no: EM131734442

Questions Cloud

Brief overview of the role of hormones : Demonstrate your research and knowledge skills in the following aspects of facial treatments -
Compare and contrast classes and objects in java : Compare and contrast classes and objects in Java. Construct classes through systematic procedures. Discuss object-oriented design principles.
Elaborate on specific concepts that you found useful : Discuss ideas from Understanding Comics What did you learn? Please refer to and elaborate on specific concepts that you found useful/interesting
What is the pv of all future cash flows : (a) What is the PV of all future cash flows if it is assumed that the gold mine is never closed?
What should be the income reported by garfield : Ignoring income taxes, what should be the income reported by Garfield from the lease for the year ended December 31, 2012
Find amount of risk in the equity investment : Without assuming riskless debt, what is the relationship between the ex ante equity risk premium and the amount of risk in the equity investment.
Write application containing an array of ten string values : Can you provide a solution for the following? Write an application containing an array of 10 String values, and display them in ascending order.
Discuss the results of the swot analysis : Make a recommendation to senior management based upon the results of the SWOT analysis
How does leverage affect the equity investor : How does leverage affect the equity investor's ex ante risk-adjusted return, or the expected risk premium per unit of risk, assuming the property is bought.

Reviews

Write a Review

Accounting Basics Questions & Answers

  The inventory costing method was changed

a)Each of the following situations occurred during 2013 for one of your audit clients:

  Explain premature revenue recognition

Explain premature revenue recognition. You have been asked to advise a business-to- business manufacturing company how to detect fraudulent financial reporting.

  Identify the compartments where it is located

Describe in your own words, the percentage of total water on earth that is freshwater and identify the compartments where it's located?

  Brarin corporation is a small wholesaler of gourmet food

brarin corporation is a small wholesaler of gourmet food products. data regarding the stores operations followsales are

  Find out the number of periods and the rate per period for

determine the number of periods and the rate per period for each of the followingrate compounded years no. of periods

  A perpetual inventory system

Hogan’s Department Store uses a perpetual inventory system. Data for product E2-D2 include the purchases shown below. Date Number of Units Unit Price May 7 60 $11 July 28 32 17 On June 1, Hogan sold 30 units, and on August 27, 32 more units.

  Prepare a production report for the assembly department

Several years ago, Stillwater Designs expanded its market by becoming an original equipment supplier to DaimlerChrysler.

  Nitsu manufacturing corporation is preparing the annual

nitsu manufacturing corporation is preparing the annual financial statements for the stockholders. a statement of cash

  On january 1 2002 abc company purchased equipment for

on january 1 2002 abc company purchased equipment for 100000. the equipment was assigned an estimated life of 10 years

  Prepare micron''s income statement, beginning with income

All of the items described below are before taxes and the amounts should be considered material.

  Compute the planned net income for next year

ABC Company produces two types of frozen dinners, Pasta and Turkey. The budget data for next year are: Compute the planned net income for next year

  Discuss financial aspects of capital investment decisions

ACC 400- Please do not offer to complete the assignment if you cannot meet 2 hour deadline. Define capital investments. Discuss the financial and nonfinancial aspects of capital investment decisions.

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