Business, 22.04.2020 00:04 brillamontijo

On 1/1//2018, XYZ leases a machine from Super LeaseCo for two years. The estimated economic life of the machine is 5 years. At the end of the two-years, XYZ must return the machine to Super LeaseCo. XYZ has agreed to guarantee Super LeaseCo that the residual value at that time will be at least $4,000. The annual lease payment is $5,000 per year and are payable at the BEGINNING of each year (assume payments are made on 1/1/18 and 12/31/18). Assume both parties use straight-line depreciation and/or amortization and that the estimated salvage value of the machine after five years is zero.

Super LeaseCo is a financing company and uses an implicit rate of 6% to compute the annual lease payments and the Super LeaseCo paid $13,277 to purchase the machine. Super LeaseCo believes that it will have no difficulty reselling the used machine for $4,000.

XYZ’s incremental borrowing rate is also 6% and also estimates that the fair value of the machine is also $13,277. However, XYZ believes that the expected value of the machine after two years will be only $3,500 and therefore, expects to pay an additional $500 under the guarantee.

Required -

Part 1 - Prepare all required journal entries for XYZ and Super LeaseCo for 2018 and 2019. You should assume that the actual value of machine on 12/31/19 was $3,300 (Round all numbers to the nearest dollar)

Part 2 - Now assume that SuperLeaseCo is an equipment dealer and that the paid only 12,100 for the machine. What entry will SuperLeaseCo record on 1/1/18?

Part 3 - Now assume that the residual value in this problem was not guaranteed by XYZ. Prepare all required journal entries for XYZ and SuperLeaseCo for 2018. Do not do 2019.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 08:30

Match the given situations to the type of risks that a business may face while taking credit. 1. beta ltd. had taken a loan from a bank for a period of 15 years, but its sales are gradually showing a decline. 2. alpha ltd. has taken a loan for increasing its production and sales, but it has not conducted any research before making this decision. 3. delphi ltd. has an overseas client. the economy of the client’s country is going through severe recession. 4. delphi ltd. has taken a short-term loan from the bank, but its supply chain logistics are not in place. a. foreign exchange risk b. operational risk c. term of loan risk d. revenue projections risk

Answers: 3

Answer

Business, 22.06.2019 08:30

Which actions can you improve your credit score? (multiple can be selected)having a good credit score should be your prime objective as credit companies analyze your creditworthiness before giving you a loan. there are certain guidelines you can follow to ensure you have a good credit score. always pay your mortgage interest on time. if you are a student, make student loan inquiries before taking any loan. if you have multiple credit cards, manage them judiciously. maintain a healthy balance in your bank account.1. always pay your mortgage interest on time.2. if you are a student, make student loan inquiries before taking any loan.3. if you have multiple credit cards, manage them judiciously.4. maintain a healthy balance in your bank account.

Answers: 1

Answer

Business, 22.06.2019 16:50

The cost of labor is significantly lower in many countries than in the united states. if you move manufacturing to a facility to a country labeled as part of the axis of evil and a threat to world peace you will increase the net income of your client by $10 million per the facility is located in a country which limits personal freedom and engages in state sponsored terrorism. imagine you are a marketing consultant. (a) what would you tell the executives to do? (b) what are the alternatives? what are your recommendations? why do you recommend this course of action?

Answers: 1

Answer

Business, 22.06.2019 19:10

Coca-cola was primarily known for its core competencies in marketing, bottling, and distributing aerated drinks. however, with the success of gatorade, coca-cola developed competencies in the development and marketing of its own sports drink, powerade. which of the following is true of coca-cola? a. it is leveraging existing core competencies to improve current market position. b. it is building new core competencies to protect and extend its current market position. c. it is redeploying and recombining existing core competencies to compete in markets of the future. d. it is targeting the chasm between the early adopter and early majority market segment.

Answers: 1

Answer

You know the right answer?

On 1/1//2018, XYZ leases a machine from Super LeaseCo for two years. The estimated economic life of...

Questions