6.A large profitable corporation is considering a capital investment of $50,000. The equipment has a projected salvage value of $0 at the end ofthe two-year project period. The annual gross income each of the next two years is projected to be $44,000 and expenses are projected to be$14,000 annually. The depreciation amount will be $25,000 annually. This profitable corporation has an incremental income tax rate of 25% andthe MARR is 10%.The corporation has decided to use borrowed capital to finance a portion of the equipment purchase. It will pay $30,000 down and finance thebalance at an effective interest rate of 5%, to be repaid in two equal end-of-year payments (see loan details below).PaymentBoYEoYYearBalanceTotalPrincipal$1,500.00 $14,634.15 $15,365.85InterestBalance1$30,000.00 $16,134.1515,365.8516,134.15768.2915,365.850.0032,268.292,268.2930,000.00Determine the before-tax CF for Year 2 (only - not the total).

For calculation of before tax cash flows, depreciation shall not be deducted because it is a non…

Answered: portion of the equipment purchase. It w…

Business

Accounting

portion of the equipment purchase. It w al end-of-year payments (see loan deta Payment FoY

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 1: (Continued) (b) Construct an amortization schedule by completely filling in the table below. Only show the necessary work for payment period #1 in the space below the table. No need to show work for all payment periods, just the first. Payment Number Amount Paid (PMT) Outstanding Principal Interest Paid Principal Repaid Balance 0 $20,000 1 2 3 4 5 6
$100,000 x 4.79079* = Lease Payments $479,079 Right-of-Use Asset *Present value of an annuity due of $1: n = 6,i = 10%
Indicate the tramsaction prie for this situation and when revenue will be recognized Groupo sels goods to Magnus for $500,000 payment due in two installments first installment payable in 18 months and the second paymend due 6 months later. The present value of the future payments is $464,000 O $500.000 recognized at the point of sale O $464.000 reciognized at the point of sale and recognized interest revenue over the payment period O $500.000 recognize $250,000 in 18 months and $250,000 recognized 6 months later $500.000 recognize $464 000 revenue and $36.000 of interest revenue
Thrasher Construction Co. was contracted to construct a building for $1,045,000. The building is owned by the customer throughout the contract period. The contract provides for progress payments. Thrasher's accounting year ends 31 December. Work began under the contract on 1 July 20X5, and was completed on 30 September 20X7. Construction activities are summarized below by year: 20X5 Construction costs incurred during the year, $192,600; estimated costs to complete, $674,100; progress billings during the year, $163,500; and collections, $149,800. 20x6 Construction costs incurred during the year, $481,500; estimated costs to complete, $203,300; progress billing during the year, $409,100; and collections, $406,600. 20X7 Construction costs incurred during the year, $209,000. Because the contract was completed, the remaining balance was billed and later collected in full per the contract. Required: 1. Prepare Thrasher's journal entries to record these events. Assume that percentage of…
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6. On August 1, 2012, Gabriel Company leased a machine to Baby Company for a six-year period requiring payments of P100,000 at the beginning of each year. The machine cost P480,000, which is the fair value at the lease date, and has a useful life of eight years with no residual value. Gabriel's implicit interest rate is 10% and present value factors are rounded off to three decimal places. Gabriel appropriately recorded the lease as a direct financing lease. /
Which of the following statements about the Initial recording of a llability is true? Multiple Choice It is measured in terms of current cesh equivalent. It is only recorded if it must be paid within the current operating cycle or ane year, whichever is longer. It is reported as current. It is reported as long-term.
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A18-11 Lessee Accounting; Amortization Table; Entries: (LO 18-2, 18-4) Watson Co. entered into a lease arrangement for a truck on 1 April 20X2 that had the following terms. • The lease payments are $13,400 per year, payable each 1 April for four years. The lease may be renewed at the option of the lessor for a further five years for $4,000 per year. • Based on an allocation of the lease payment on relative stand-alone prices, the lease and non-lease components (maintenance) are $12,100 and $1,300 respectively. Expected amounts to be paid under the residual value guarantee are $11,400 if the lessee ends the lease at the end of the first lease term, and $3,800 if they end the lease at the end of the second lease term. • The leased asset has a useful life of ten years and a fair value of $64,000. The Interest rate implicit in the lease is 8%. . (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1-a. Calculate the right-of-use asset.…