cial Accounting & Reporting III ses Part 2, In-class activity #2 ses R Us (LRU) has been approached by New Manufacturing, asking LRU to develop several alternative easing contract for equipment New Manufacturing would like to acquire. ● The equipment has a fair value of $1,300,000 and an expected useful life of 10 years. It will cost L $1,000,000 to acquire the equipment, and LRU expects to also incur $5,000 in initial direct costs. expects to recover the initial direct costs as part of the payments under the lease, and will therefc include that amount in the calculation to determine the lease payment. LRU's required rate of return is 7% for leases where the probable payments equal or exceed the e fair value of the leased asset, and a rate of return of 8% for leases that include unguaranteed resi value. All payments are annual payments that will be due on the first day of the year, beginning on the commencement date.

cial Accounting & Reporting III ses Part 2, In-class activity #2 ses R Us (LRU) has been approached by New Manufacturing, asking LRU to develop several alternative easing contract for equipment New Manufacturing would like to acquire. ● The equipment has a fair value of $1,300,000 and an expected useful life of 10 years. It will cost L $1,000,000 to acquire the equipment, and LRU expects to also incur $5,000 in initial direct costs. expects to recover the initial direct costs as part of the payments under the lease, and will therefc include that amount in the calculation to determine the lease payment. LRU's required rate of return is 7% for leases where the probable payments equal or exceed the e fair value of the leased asset, and a rate of return of 8% for leases that include unguaranteed resi value. All payments are annual payments that will be due on the first day of the year, beginning on the commencement date.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

ChapterM: Time Value Of Money Module

Section: Chapter Questions

Problem 4C

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Written report with the following content: • Appendix1: Leasing Explain the calculations. Your recommendations Objective: Should FFT lease or construct their own production facility Option 1: Construct Costs to incur: Buying land, construct building and getting ready for use (FFT has these funds available in their bank account today so no mortgage is needed) $ 1,200,000 Taxes, insurance, and repairs (per year) $110,000 Intended years of use 15 Projected market value in 15 years $ 1,250,000 Option 2: Lease Intended years of use 15 Deposit required today (this deposit will be returned to FFT when the lease contract is complete is 15 years) $ 100,000 Annual lease payment $ 160,000 Property taxes (annual) to be paid by FFT $ 15,000 Insurance (annual) to be paid by FFT $ 15,000 Required rate of return 8% Methodology: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option…
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Mc Graw ill Check my work mode! This shows what is correct or incorrect for the work you have completed so far. It does not indicate completi Exercise 15-41 (Algo) Sale-leaseback [LO Appendix 15] To raise operating funds, Signal Aviation sold an airplane on January 1, 2024, to a finance company for $950,000. Signal immediately leased the plane back for a 12-year period, at which time ownership of the airplane will transfer to Signal. . The airplane has a fair value of $980,000. . Its cost and its book value were $690,000. . Its useful life is estimated to be 14 years. . The lease requires Signal to make payments of $126,750 to the finance company each January 1. Signal depreciates assets on a straight-line basis. . The lease has an implicit rate of 10%. Required: 1. & 2. Prepare the appropriate entries for Signal on January 1, 2024 and December 31, 2024, to record the transaction and necessary adjustments. Note: Round your intermediate and final answers to the nearest whole dollar…
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Please indicate the appropriate category of the following items: Question 23 options: Cost of equipment obtained under capital lease Land Goodwill acquired Music Copyrights The cost of developing a patent The cost of purchasing a patent Brand Names Research costs The cost of an annual update of payroll software Goodwill generated internally 1. Intangible Asset 2. Tangible Asset 3. Expense 4. Other (none of the above) 5. Not recorded on financial statements
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The acquisition of a new machine with a purchase price of $96,072, transportation costs of $7,638, installation costs of $6,963, and special acquisition fees of $2,105, would be journalized with a debit to the asset account for a.$96,072 b.$112,778 c.$105,140 d.$103,035
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