premium (discount) • Capital leases are included in the company’s liabilities while operating leases are not. Capital leases are recorded at the present value of the periodic lease payment discounted at the lessee’s cost of capital less the cumulative principal component of the periodic lease payment. • Mortgage payable are reported not unlike that of the reporting requirement for bonds and capital leases liabilities. The present value of the periodic payments is computed at the discount rate
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Capital Lease: which is a lease treated as an acquisition of the assets financed by a loan OR Operating Lease: which is a lease treated as a rental agreement so there for would not be an asset. BUT a capital lease has to meet one of three criteria and in this case it does. The criteria it meets States: The present value of the minimum lease payments is equal to or greater than 90% of the fair market value of leased property. And if you were to calculate the lease payments out (10
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Response to Client Request I Erica R Ford ACC/541 October 7, 2013 Professor Michael Meyer Response to Client Request I Memorandum October 7, 2013 To: Raelynn Floyd, Supervisor of Standards From: Erica Ford, CPA Re: FASB Lease Structures and types As per your request I have diligently conducted research to advise our clients of the best leasing option in regards to their current business proposition. Recently, I was informed last week of the new venture and the need
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Part A: Long-term debt can generally be classified into three different categories: bonds payable, notes payable, and capital leases. Bonds payable can be secured by collateral, such as a mortgage bond, or unsecured, backed only by a company’s promise to pay. Most bonds carry a stated rate of interest but others are sold at a discount with an implied rate of interest inherent in the discounted sale. Some bonds can be converted into other securities. Other bonds can be called in by the corporation
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Chapter 10 19. Amortization schedule for bonds Period | 6 | Interest Rate | 5% / semiannual | Face Value | $100,000 | Coupon Rate | 4% / semiannual | Payment | $4,000 | a) Initial Issue Price = PV(0.05, 6, 4000, 100,000, 0) = $94,924.31 b) Bond payable amortization schedule Period(1) | Balance atBeginningOf Period(2) | InterestExpensefor Period(3) | CashPayment(4) | Increase inliability(5) | Balanceat Endof Period(6) | 1 | $94,924.31 | $4,746.22 | $4,000.00 | $746
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Midterm Exam Review 1.The revenue recognition principle provides that revenue is recognized when? Pages 907-8 Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold. Although Dot Point sells the appliances on an installment basis, all service contracts are cash sales at the time of purchase by the buyer. Collections received for service contracts should be recorded when? An alternative available when the seller is exposed to continued
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party contractor will need to be engaged. There are several risks associated with contracting a third party. Specifically, FFI will have less control over quality and the contractor will have access to FFI’s secret recipes for potpourri. Also, the minimum order levels required by the contractors represent the majority of production; this would require a large upfront capital outlay. The home sales program is relatively unknown to us and will have its own risks. The commission rate should be competitive
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Restructuring Debt Accounting 545 PART A Debt can be categorized into three major categories, bonds, notes payable, and capital leases. They are all forms of debt that have similarities and differences. The comparison for the current reporting for debt based on bonds, notes payable and capital leases are stated below: Bonds: Bonds are considered long-term liabilities and have a different maturity date then current liabilities. The maturity date for a bond is usually a longer period of
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W. Ruland, Spring 2009 Credit Risk The Issue Will the loans will be paid on-time and in full. Who Should Understand Credit Risk? Borrowers Prospective lenders including those who sell on account Should they lend? How should they structure the loan? Shareholders Potential purchasers of products or services Credit Ratings Important to the business Influences the cost of borrowing; perhaps the ability to borrow, Influences the market for its securities given that
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Proposed Accounting Standards Update (Revised) Issued: May 16, 2013 Comments Due: September 13, 2013 Leases (Topic 842) a revision of the 2010 proposed FASB Accounting Standards Update, Leases (Topic 840) This Exposure Draft of a proposed Accounting Standards Update of Topic 842 is issued by the Board for public comment. Comments can be provided using the electronic feedback form available on the FASB website. Written comments should be addressed to: Technical Director File Reference No
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