BUSINESS COLLEGE

On January 2, 2021, Ivanhoe, Inc. signed a 10-year noncancelable lease for a heavy duty drill press. The lease stipulated annual payments of $320000 starting at the beginning of the first year, with title passing to Ivanhoe at the expiration of the lease. Ivanhoe treated this transaction as a finance lease. The drill press has an estimated useful life of 15 years, with no salvage value. Ivanhoe uses straight-line depreciation for all of its plant assets. Aggregate lease payments were determined to have a present value of $1966261, based on implicit interest of 10%.In its 2021 income statement, what amount of interest expense should Ivanhoe report from this lease transaction?

Answers

Answer 1
Answer:

Answer:

interest expense:    $ 164,621.65

Explanation:

We solve for the present value of the lease value:

C * (1-(1+r)^(-time) )/(rate) = PV\n

C 320,000.00

time 10

rate 0.1

320000 * (1-(1+0.1)^(-10) )/(0.1) = PV\n

PV $1,966,261.4738

We made the first payment which decrease our payable:

1,966,261.47 - 320,000 = 1,646,261.47‬

And now, from this amount we solve for the interest expense:

And now, we calculate the 10% interest for the year:

1,646,216.47 x 10% = 164,621.65 interest expense

Related Questions

3. Problems and Applications Q3 This chapter discusses companies that are oligopolists in the market for the goods they sell. Many of the same ideas apply to companies that are oligopolists in the market for the inputs they buy. If sellers who are oligopolists try to increase the price of goods they sell, the goal of buyers who are oligopolists is to try to decrease the prices of goods they buy. Major league baseball team owners have an oligopoly in the market for baseball players. The owners' goal is to keep players' salaries . True or False: This goal is difficult to achieve because teams have different budgets. True False Baseball players went on strike in 1994 because they would not accept the salary cap that the owners wanted to impose. True or False: The owners felt the need for a salary cap to help prevent any team from cheating. True False
If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but it does not represent a real financial cost to your firm as long as the customer periodically pays off its entire balance. A. True B. False .
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 20,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows: September 1, 2017 $0.46 December 1, 2017 0.44 December 31, 2017 0.48 March 1, 2018 0.45 Assume that Benjamin acquired the widgets on December 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018
At the end of 2017, Carpenter Co. has accounts receivable of $778,100 and an allowance for doubtful accounts of $63,200. On January 24, 2018, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $7,400.Prepare the journal entry to record the write-off.
A merchandiser has four closing journal entries at the end of an accounting cycle. Select the correct entries below. (Check all that apply.) Close asset accounts. Close the dividends account. Close revenue accounts. Close expense accounts. Close the merchandise inventory account. Close the income summary account.

In an efficient market, professional portfolio management can offer all of the following benefits except which of the following? A. A superior risk-return trade-off
B. Low-cost diversification
C. A targeted risk level
D. Low-cost record keeping

Answers

Answer:

A. A superior risk-return trade-off

Explanation:

In a normal and efficient market a professional portfolio management service is able to offer  Low-cost diversification, A targeted risk level, and even a Low-cost record keeping. What they cannot offer is a superior risk-return trade-off, this is because risk-return holds a very correlated trade-off in which the higher amount of risk your portfolio holds the higher returns you can get from it, but this does not get rid of the risk which can cause you to lose all of your money. Therefore "superior" is unnachievable.

If you were looking for an advertising medium that worked for segmented audiences, had prestige, had a long shelf life, and money was of no object, which of the following would you select?a. ​interactive adsb. ​magazinesc. ​direct maild. ​televisione. radio

Answers

Answer:

The correct answer is the option B: magazines.

Explanation:

To begin with, in the case where the manager is looking for an advertising that has the characteristics of being medium and that worked for segmented audiences, with prestige and long shelf life then the correct option will be to choose a magazine that properly accomplish with the particularities of the case. The magazine will be targeted to one audience to the fact that it can not include all the topics that are in trend nowadays. Moreover, the magazine will also be of prestige in the case where it has several years in the industry and its name means something in the market. Therefore that a magazine will accomplish with all the characteristics that the advertiser is looking for.

Ben and Jerry were shareholders of Water Ice Inc., an S corp. On Jan. 1, 1998, Ben owned 40 shares and Jerry owned 60 shares. Ben sold his shares to Joe for $10,000 on March 31, 1998. The corp. reported a $50,000 loss at the end of 1998.How much of the loss is allocated to Joe?
A. $20,000
B. $15,060
C. $12,500
D. $10,000

Answers

Answer: $15,060

Explanation:

From the question, we are informed that Ben and Jerry were shareholders of Water Ice Inc., an S corp. On Jan. 1, 1998, Ben owned 40 shares and Jerry owned 60 shares.

We are further told that Ben sold his shares to Joe for $10,000 on March 31, 1998 and that the corp. reported a $50,000 loss at the end of 1998. The loss that will be allocated to Joe will be:

= $50,000 × 40% × 9/12

= $50,000 × 0.4 × 0.75

= $15,000

The closest figure we have close to that is $15,060 which is option B

The sales of Carephase Company for the year are as given below: Quarter 1 $400,000 Quarter 2 $360,000 Quarter 3 $620,000 Quarter 4 $580,000 Fifty percent of the sales of the company are paid in cash. Of the sales on account, 60 percent are collected in the quarter of sale, the remaining 40 percent are collected in the quarter following the sale. Calculate the cash receipts for Quarter 4.

Answers

Answer:

The correct answer is $588,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the cash receipts for Quarter 4 by using following formula:

Cash receipts for Quarter 4 = Cash Sales + Cash collected from credit sales in Qtr 4 + Accounts receivable of Qtr 3

Where, Cash sales = $580,000 × 50% = $290,000

Cash collected from credit sales in Qtr 4 = ($580,000 × 50%) ×60% = $174,000

Accounts receivable of Qtr 3 = ($620,000 × 50%) × 40% = $124,000

By putting the value, we get

Cash receipts = $290,000+$174,000+$124,000

= $588,000

EB17. LO 7.5The production cost for UV protective sunglasses is $5.50 per unit and fixed costs are $19,400 per month. How much is the favorable or unfavorable variance if 14,000 units were produced for a total of $97,000?

Answers

Answer:

$600 unfavorable

Explanation:

The budgeted cost of producing 14,000 units at $5.50 per unit and with fixed costs of $19,400 is:

B = 14,000*5.50 + 19,400\nB= \$96,400

The variance is given by subtracting the budgeted cost by the actual cost ($97,000):

V= \$96,400 - \$97,000\nV= -\$600

Since the variance is negative, the variance is unfavorable

An underpinning of all commerce is effective communications, knowledge of where goods and services exit and where they are needed and the ability to communicate instantaneously across vast distances. Facilitation this movement into the future one can observe which shifts in examining world population and telecommunications?

Answers

Explanation:

Analyzing the historical context, it is possible to see how the new communication technologies were essential for the development of commerce. We currently live in the digital age, where almost every individual has access to a cell phone with internet and can communicate within seconds with any part of the world.

This technological revolution also had a great economic impact, generating new business models.

Companies have to adapt to this reality and insert themselves in the new market based on the internet, in creating relationships with consumers, in the practice of positive social and environmental attitudes, etc. Some companies needed to reinvent themselves to adapt to the new economic context, or they would lose strength in the market and would cease to exist.

The fact is that the technological revolution has impacted commercial relations around the world, today the consumer seeks the solution to his problems and desires, not being restricted to local consumption, which causes a new redesign of commerce and manages impacts on the economy of the world.
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