What will be the balances in the balance sheet accounts

Assignment Help Accounting Basics
Reference no: EM133067799

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 $20,000 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 $171,000 (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 $72,098.) Crescent seeks a 8% 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)?

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: EM133067799

Questions Cloud

Shareholders meeting : Explain the three Blanchard and Peale questions that these two managers should have asked themselves before the shareholders' meeting.
Calculate the total budget and volume variances for overhead : Shamrock Company's overhead rate was based on estimates of $186,000 for overhead costs. Calculate the total budget and volume variances for overhead
What is the stock price per share : Use the following data to calculate your stock value. Assume you use the historical geometric average growth rate (rounded to 2 decimals) for initial growth rat
Explain the role of participants in the derivatives market : Critically explain the role and objectives of the main participants in the derivatives market. Provide examples to illustrate and support your answer
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)
Determining the rate of interest : The rule of 72 worksheet, use the Rule of 72 to estimate how long it would take the following investments to double in value:
The power of good design : Review The Power of Good Design and select three of the ten principles noted for good design.
What are the features of type of issue : a) Bharti Airtel plans to expand its network and prepare for the launch of 5G services. The board had approved raising up to 21,000 crore by issuing additional
What fixed cost rate should be used : In 2015, Kranworth started allocating corporate R&D costs among its three divisions (Retail, Wholesale, Custom). What fixed cost rate should be used

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.

  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!

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