“The Bear Minimum” Case 08-4 Blakely Broom Connor Greco Spencer Craft Big Bear Power, a widely held public utility company, has agreed to a 10-year non-cancelable lease of a combustion turbine from Goliath Co. The lease was signed on December 15, 2010, and begins on January 1, 2011. The lease requires Big Bear to pay $1 million of legal fees incurred by Goliath, and third party legal fees as part of the lease. The lease also states that if a change in control event occurs, Big Bear must
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MFRS 119 Employee Benefits MFRS 119 define employee benefits as to prescribe the accounting and disclosure by employers for employee benefits. Thus, it replaces MASB Approved Accounting Standard IAS 19 Accounting for Retirement Benefits in the Financial Statements of Employees. The major changes from old IAS 19 are set out in the Basis for Conclusions. The Standard does not deal with reporting by employee benefit plans (see FRS 126 Accounting and Reporting by Retirement Benefit Plans ). From MFRS
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operating lease for Company ABC. To accomplish this, I will discuss a little background on all of the options and the advantages and disadvantages of a lease. This will aid company ABC in determining the best course of action for acquiring equipment in the future. First, what is a lease? “According to the Federal Accounting Standards Board (FASB), a lease is an agreement conveying the right to use property, plant, and equipment usually for a stated period of time” (Lee, 2003). Essentially a lease is an
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Homework Exercise 7- American Food Services, Inc made a lease agreement $4 million (FV & PV) 4 equal payments at end of each year. Useful life is 4 years no residual value. Interest rate implicated is 10%. 1. Prepare journal entry for American Food Services at Jan 1 2011. Lease Equipment (packaging machine) 4,000,000 Lease Payable(packaging machine) 4,000,000 2. Prepare amortization schedule for the four-year term. Date | Payment | Interest | Principle | Balance | 1/1/11 | - | - |
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Client Lease Research Melinda Ferguson ACC/541 March 5, 2012 Valerie Turnbow Client Lease Research A lease is an agreement between two parties where one party makes payments to another party for the use of an asset over a certain time period. Leases are classified as a capital lease or an operating lease depending on the lease agreement. A capital lease is when the lessee purchases the asset at the end of the lease, if the lease agreement meets one of the four criteria of capital leases. Capital
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24, December 2012 Memorandum To: Supervisor From: Sarah Dixon Re: Leases and lease structure issues It has come to my attention of our client’s concern regarding the uncertain relationship with a customer who may potentially offer the company a significant growth benefit. The following memo will address the client’s concern and recommend a solution to the problem, giving a summary of several different types of leases. One of the most important issues here lies with understanding that
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Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 840 Leases regulations over how to properly account for the leased equipment, I have come up with recommendations of how you should classify the lease, measure the initial minimum lease payment (MLP), calculate the subsequent measurements, and derecognize the leased asset. The remainder of this memo provides my analysis and support for these conclusions. Lease Classification According to ASC 840-10-25-1, there are four criteria
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1. Exercise 15-1 Operating lease [LO4] On January 1, 2011, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers from ComputerWorld Corporation under a two-year operating lease agreement. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by Computer World at a cost of $90,000 and were expected to have a useful life of six years with no residual value. |
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CHAPTER 21 For a capital lease, the FASB has identified four criteria. 1. Lease transfers ownership of the property to the lessee. 2. Lease contains a bargain-purchase option. 3. Lease term is equal to 75 percent or more of the estimated economic life of the leased property. 4. The present value of the minimum lease payments (excluding executory costs) equals or exceeds 90 percent of the fair value of the leased property. **** Leases that DO NOT meet any of the four criteria are accounted
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of a Capital Lease December 3, 2012 MEMORANDUM TO: Trucking Company, Inc. FROM: Accountant DATE: December 3rd, 2012 SUBJECT: Benefits of a Capital Lease CC: John Smith, Supervisor In response to your request for more information on the topic of leases, I will explain the different aspects of leases to help you get a better understanding of the topic so that you may make an informed decision on which type of lease is best for your company. Capital Leases A capital lease emulates an
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