What will be the balances in the balance sheet accounts

Assignment Help Financial Accounting
Reference no: EM132973079

Question - At January 1, 2021, Café Med leased restaurant equipment from Crescent Corporation under a nine-year lease agreement. The lease agreement specifies annual payments of $29,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Crescent at a cost of $216,000 (its fair value) and was expected to have a useful life of 13 years with no salvage value at the end of its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $76,131.) Crescent seeks a 10% return on its lease investments. By this arrangement, the lease is deemed to be an operating lease.

Required -

1. What will be the effect of the lease on Café Med's earnings for the first year (ignore taxes)? (Enter decreases with negative sign.)

2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Café Med (ignore taxes)?

Reference no: EM132973079

Questions Cloud

What will be the company growth rate : Thomas, Inc.'s return on equity is 13 percent and management has plans to retain 20 percent of earnings. What will be the company growth rate
How is cost-benefit criterion important in implementation : Cash control is critical to any given management to ensure, How is the cost-benefit criterion important in the implementation of internal control?
What is the net advantage or disadvantage : Alternatively, the keyboards could be sold "as is" for $7,000. What is the net advantage or disadvantage of re-working the keyboards
Should Saban make the switch and why : Should Saban make the switch? (Assume the compensating balance at the new bank will be deposited in a? non-interest-earning account.)
What will be the balances in the balance sheet accounts : What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Café Med (ignore taxes)
What is the value at date of a growing perpetual stream : What is the value at date t = 0 of a growing perpetual stream of $200 monthly payments that begin at date t = 1 (1st month) and grows at 0.05% per month?
How much is maine company budgeted overhead : Maine plans to manufacture 96,000 units whereby one unit requires five minutes of direct labor. How much is Maine Company's budgeted overhead
What is the accumulated future value of the annual amounts : What is the accumulated future value of those annual amounts over 17 years if the annual earnings were invested regularly and provided a 3 percent return
Explain the impact of globalization : Selected countries: Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan (Central Asia)

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare the journal entry to record the establishment

White invests $30,000 cash and Read invests $40,000 cash on March 1, 2020. Prepare the journal entry to record the establishment of the partnership

  Prepare the general journal entry to update depreciation

Prepare the general journal entry to update depreciation to July 1, 2009 and prepare the general journal entry to record the disposal of the machine

  Identify control environment factors that affect company

You expanded your tests in view of the situationsand are satisfied that the perpertual records reasonably reflect the quantities on hand. Identify control environment factors that affect the company's internal control.

  Compute a classified balance sheet at december

Prepare a classified balance sheet at December 31, 2008. As of December 31, 2008, has the financing for Ethan Allen's investment in assets primarily come from liabilities or stockholders' equity?

  Module 11 what are the maturities on intels long-term debt2

module 11 what are the maturities on intels long-term debt?2 what are intels projected obligations on long-term debt

  Explain the equity method of accounting

Montego Limited bought 30% of the Ordinary shares in Negril Limited on 1 April 2018 at a price of $3.10 per share. Explain the equity method of accounting

  Which is the correct debt margin amount

Which is the correct debt margin amount? The rate of debt limitation applicable to the Hilton community is 6 percent of total property valuation.

  Annual interest rate of 6 percent

a. Calculate the future value of ?$5,000?, given that it will be held in the bank for 7 years and earn an annual interest rate of 6 percent.

  How much was Wagner revenue for the year

No dividends were paid. Expenses incurred during the year were $110,000. How much was Wagner's revenue for the year

  What is the smallest possible loss in the next week

Stock PVQ has an annual mean return of 16% and a standard deviation of 42%. What is the smallest possible loss in the next week with a probability of 2.5%?

  What is the machine acquisition cost

What is this machine's acquisition cost? Kipling Inc. purchased a machine on May 31 for $64000, paying cash. The company also paid $500 for freight

  Calculate the depreciation expense under units-of-production

Calculate the depreciation expense under the units-of-production method, assuming the actual number of units produced was 70,680 in 2016

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