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Makayla Phillips

2-24-2015

Int Acc Chapter 15 Homework

#15:5 1. 391,548 x 15.32380 (present value of annuity n=20 I = 3%) = 6,000,000

2. Liab 9-30..………………… 6,000,000

Lease pay 9-30.…………. (391,548)

Lease Pay 12-31………… (223,294)

Net Liab. 12-31……….. = 5,385,158

Asset 9-30………………..6,000,000

Acc/dep 12-31…………. (300,000)

End 12-31………………… 5,700,000

3. 9-30 Int. Exp……………. 0

12-31 Int. Exp………….. 168,254

Dep. Exp………………….. 300,000

TOTAL EXP………………. 468,254

4. The 6,000,000 investment of lease is a noncash investment, and financing activities would be found in the notes of a financial statement. The lease payments are divided between the interest and principal. The Interest, 168,254, is reported on cash outflow from operating activities. The principle 614,842, is reported as cash outflows for financing activities.

#15:6 1. Same as 15:5

2. 9-30 Int. Rev………………… 0

12-31 Int. Rev………………. 168,254

12-31 Total Int. Rev……… 168,254

3. The 6,000,000 direct financing lease is part of the noncash investing activity and is found in the notes of financial statements. Cash lease payments are divided between interest and principle. Interest, 168,254 is cash flows from operating activities. Principle 614,842, goes on the cash inflows from investing activities.

#15:7 1. Same as 15:5

2. Same as 15:5

3. 9-30 Int. Rev………………….0

12-31 Int. Rev……………… 168,254

12-31 Total Int. Rev…….. 168,254

Sales Rev………………….. 6,000,000

COGS……………………….. (5,000,000)

TOTAL REV……………….. 1,168,254

4. The 6,000,000 sale-type lease is part of the noncash activity in the notes portion of the financial reports. Cash lease payments are cash flows from operating activities, for both interest and principle portions.

CASE 15:6

1. To avoid risks of owning certain assets, and just all in all to keep asset cost down. Which leasing has favorable tax benfits.

2. Leased assets are...