King Cones leased ice cream-making equipment from Ace Leasing. Ace earns interest under such arrangements at a 6% annual rate. The lease term is eight months with monthly payments of $10,000 at the end of each month. Ace purchased the equipment having an estimated useful life of four years at a cost of $300,000. Both the lessee and the lessor elected the short-term lease option. Amortization is recorded at the end of each month on a straightline basis. Ace depreciates assets monthly on a straight-line basis. What is the effect of the lease on King Cones’ earnings during the eight-month term, ignoring taxes?
Answer to relevant QuestionsIn the situation described in BE 15–30, what is the effect of the lease on Ace Leasing’s earnings during the eightmonth term, ignoring taxes?Manufacturers Southern leased high-tech electronic equipment from International Machines on January 1, 2013. International Machines manufactured the equipment at a cost of $200,000 and lists a cash selling price of $250,177. ...American Food Services, Inc. leased a packaging machine from Barton and Barton Corporation on January 1, 2013. Barton and Barton completed construction of the machine on January 1, 2013. The lease agreement for the $4 ...Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2013. Manufacturers Southern has the option to renew the lease at the end of two years for an additional three years for $8,000 ...Allmond Corporation, organized on January 3, 2013, had pretax accounting income of $14 million and taxable income of $20 million for the year ended December 31, 2013. The 2013 tax rate is 35%. The only difference between ...
Post your question