Identify the correct answer by solving estimated warranty payable at the end of 2018.

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Chapter 9, Problem 4SC

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Identify the correct answer by solving estimated warranty payable at the end of 2018.

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Zanzibar Limited entered into a lease agreement on July 1 2016 to lease some highly customized hydraulic equipment to Kaizen Limited. The fair value of the equipment as at that date was $700,000. The terms of the lease agreement were: Lease term Equipment economic life Annual rental payment, in arrears (commencing June 30th 2017) Equipment residual value Guaranteed residual value by Zanzibar Incremental borrowing rate 5 years 6 years $160,000 $100,000 $60,000 8% Interest rate implicit in the lease 6% 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. The annual rental payment includes $10,000 to reimburse the lessor for maintenance fees incurred on behalf of the lessee. Requirements: a) Discuss the nature of the lease using the appropriate criteria. Justify your answer using calculations where applicable b)…

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(a) A property lease includes a requirement that the premises are to be repainted every five years and the future cost is estimated at $100,000. The lessee prefers to spread the cost over the five years by charging $$20,000 against profits each year. Thereby creating a provision of $100,000 in five years' time and affecting profits equally each year. Requirement: Was it correct for the lessee to provide for this cost? Explain your decision (b) A retail store has a policy of refunding purchases by dissatisfied customers, even though it is under no legal obligation. Its policy of making refunds is generally known. Requirements: Should a provision be made at year end

Answer 2

Question

Chapter 9, Problem 4SC

To determine

Identify the correct answer by solving estimated warranty payable at the end of 2018.

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Answer 3

Question

Chapter 9, Problem 4SC

To determine

Identify the correct answer by solving estimated warranty payable at the end of 2018.

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Answer 4

Question

Chapter 9, Problem 4SC

To determine

Identify the correct answer by solving estimated warranty payable at the end of 2018.

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Answer 5

Chapter 9, Problem 4SC

To determine

Identify the correct answer by solving estimated warranty payable at the end of 2018.

Answer 6

Chapter 9, Problem 4SC

To determine

Identify the correct answer by solving estimated warranty payable at the end of 2018.

Answer 7

Chapter 9, Problem 4SC

To determine

Identify the correct answer by solving estimated warranty payable at the end of 2018.

Answer 8

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Answer 11

Ch. 9.A - Calculate employee payroll (Learning Objective 8)...Ch. 9.A - Calculate net pay (Learning Objective 8) 5-10 min....Ch. 9.A - Employer payroll costs (Learning Objective 8) 5-10...Ch. 9.A - Prob. 4AE Ch. 9.A - Prob. 5AE Ch. 9.A - Prob. 6AE Ch. 9.A - Prob. 7BE Ch. 9.A - Prob. 8BE Ch. 9.A - Calculating gross and net pay (Learning Objective...Ch. 9.A - Calculating gross and net pay (Learning Objective...

Identify the correct answer by solving estimated warranty payable at the end of 2018.

Solution Summary: The author explains that options a, c, and d are incorrect and option b. is the correct answer.

Identify the correct answer by solving estimated warranty payable at the end of 2018.

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Chapter 9 Solutions