Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
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Chapter 13, Problem 15RQ
Describe an alternative to using
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Zanzibar Limited entered into a lease agreement on July 1 2016 to lease somehighly customized hydraulic equipment to Kaizen Limited. The fair value of theequipment as at that date was $ 700,000. The terms of the lease agreement were:
Note: the lease is cancellable but only with Zanzibar’s permission
At the end of the lease term, the equipment is to be returned to Zanzibar Limited.On July 1, 2016, Zanzibar incurred $12,000 in legal fees for setting up the lease. Theannual rental payment includes $10, 000 to reimburse the lessor for maintenancefees incurred on behalf of the lessee.
Requirements:a) Discuss the nature of the lease using the appropriate criteria. Justify youranswer using calculations where applicable
b) Prepare the lease schedule for the Kaizen Limited
c) Prepare Kaizen’s journal entries for 2016 & 2017
d) If the lease agreement could be cancelled at any time without penalty.Wouldyour answer in parts a & b change? If yes, explain how and why.
Chapter 13 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 13 - What is the managerial accountants primary...Ch. 13 - Define goal congruence, and explain why it is...Ch. 13 - Describe the managerial approach known as...Ch. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Create an example showing how residual income is...Ch. 13 - What is the chief disadvantage of ROI as an...Ch. 13 - Why is there typically a rise in ROI or residual...Ch. 13 - Define the term economic value added. How does it...
Ch. 13 - Distinguish between the following measures of...Ch. 13 - Why do some companies use gross book value instead...Ch. 13 - Explain why it is important in performance...Ch. 13 - How do organizations use pay for performance to...Ch. 13 - Describe an alternative to using ROI or residual...Ch. 13 - Prob. 16RQCh. 13 - Prob. 17RQCh. 13 - Discuss the importance of nonfinancial information...Ch. 13 - Identify and explain the managerial accountants...Ch. 13 - Describe four methods by which transfer prices may...Ch. 13 - Explain the significance of excess capacity in the...Ch. 13 - Why might income-tax laws affect the...Ch. 13 - Prob. 23RQCh. 13 - The following data pertain to Dakota Divisions...Ch. 13 - Refer to the preceding exercise. Requited:...Ch. 13 - Refer to the data for Exercise 1324. Assume that...Ch. 13 - Golden Gate Construction Associates, a real estate...Ch. 13 - Prob. 28ECh. 13 - Prob. 29ECh. 13 - Refer to Exhibit 133. Assume that you are a...Ch. 13 - Prob. 32ECh. 13 - Prob. 33ECh. 13 - Prob. 34ECh. 13 - Prob. 35ECh. 13 - Long Beach Pharmaceutical Company has two...Ch. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Long Beach Pharmaceutical Company has two...Ch. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Megatronics Corporation, a massive retailer of...Ch. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Clearview Window Company manufactures windows for...Ch. 13 - Prob. 47PCh. 13 - Alpha Communications, Inc., which produces...Ch. 13 - Prob. 49PCh. 13 - Holiday Entertainment Corporation (HHC), a...Ch. 13 - InterGlobal Industries is a diversified...Ch. 13 - Prob. 52C
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- Suppose Chrysler Motors has 720 million shares outstanding with a share price of $68.25, and $30 billion in debt. If in three years, Chrysler has 750 million shares outstanding trading for $76 per share, how much debt will Chrysler have if it maintains a constant debt-equity ratio? Correct Answerarrow_forwardHow much is Henry Enterprises break even point?arrow_forwardSuppose Chrysler Motors has 720 million shares outstanding with a share price of $68.25, and $30 billion in debt. If in three years, Chrysler has 750 million shares outstanding trading for $76 per share, how much debt will Chrysler have if it maintains a constant debt-equity ratio? Accounting Answerarrow_forward
- Need help with this question solution general accountingarrow_forwardNo WRONG ANSWERarrow_forwardSuppose Chrysler Motors has 720 million shares outstanding with a share price of $68.25, and $30 billion in debt. If in three years, Chrysler has 750 million shares outstanding trading for $76 per share, how much debt will Chrysler have if it maintains a constant debt-equity ratio? Answer this Questionarrow_forward
- Based on this informationarrow_forwardHi expert please give me answer general accounting questionarrow_forwardSuppose Chrysler Motors has 720 million shares outstanding with a share price of $68.25, and $30 billion in debt. If in three years, Chrysler has 750 million shares outstanding trading for $76 per share, how much debt will Chrysler have if it maintains a constant debt-equity ratio?arrow_forward
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