At January 1, 2021, Rycker Corporation leased nonspecialized manufacturing equipment from Stone, Inc. under a nine-year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
At January 1, 2021, Rycker Corporation leased nonspecialized manufacturing equipment from Stone, Inc. under a nine-year lease agreement. The lease agreement specifies annual payments of $84,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Stone at a cost of $567,300 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of Its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $39,600.) Stone seeks a 12% return on its lease Investments. By this arrangement, the lease is deemed to be a finance lease. (EV of $1. PVof $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $0 (Use appropriate factor(s) from the tables provided.) Required: 1. What will be the effect of the lease on Rycker's earnings for the first year (ignore taxes)? (Enter decreases with negative numbers. Round your intermediate calculations and final answers to the nearest whole dollar.) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Rycker (ignore taxes)? (Round your intermediate calculations and final answers to the nearest whole dollar.) Effect on earnings Lease payable balance (end of year) Right-of-use asset balance (end of year) 1. 2. At January 1, 2021, Rycker Corporation leased nonspecialized manufacturing equipment from Stone, Inc. under a nine-year lease agreement. The lease agreement specifies annual payments of $84,000 beginning January 1, 2021, the beginning of the lease, and at each December 31 thereafter through 2028. The equipment was acquired recently by Stone at a cost of $567,300 (its fair value) and was expected to have a useful life of 12 years with no salvage value at the end of Its life. (Because the lease term is only 9 years, the asset does have an expected residual value at the end of the lease term of $39,600.) Stone seeks a 12% return on its lease Investments. By this arrangement, the lease is deemed to be a finance lease. (EV of $1. PVof $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $0 (Use appropriate factor(s) from the tables provided.) Required: 1. What will be the effect of the lease on Rycker's earnings for the first year (ignore taxes)? (Enter decreases with negative numbers. Round your intermediate calculations and final answers to the nearest whole dollar.) 2. What will be the balances in the balance sheet accounts related to the lease at the end of the first year for Rycker (ignore taxes)? (Round your intermediate calculations and final answers to the nearest whole dollar.) Effect on earnings Lease payable balance (end of year) Right-of-use asset balance (end of year) 1. 2.
Expert Answer:
Answer rating: 100% (QA)
1 The effect of the lease on Ryckers earnings for the first year will be an increase o... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas
Posted Date:
Students also viewed these accounting questions
-
The equipment was expected to have a useful life of three years, or 25,000 operating hours, and a residual value of $4,500. The equipment was used for 12,000 hours during 2008, 9,000 hours in 2009,...
-
Leased Asset Hopper Corporation signed a ten-year capital lease on January 1, 2010. The lease requires annual payments of $8,000 every December 31. Required 1. Assuming an interest rate of 9%,...
-
On January 1, 2018, NRC Credit Corporation leased equipment to Brand Services under a finance/sales-type lease designed to earn NRC a 12% rate of return for providing long-term financing. The lease...
-
A 14-foot piece of string is cut into two pieces so that the longer piece is 2 feet longer than twice the shorter piece. Find the lengths of both pieces. What is the lenath of the shorter oiece?1...
-
Panther Martin invents and markets various types of fishing lures. In an effort to survey the reactions of potential buyers, it hires a research company to intercept fishermen at boat launches,...
-
What operations can be performed on a semaphore?
-
Estimate the magnitude of the magnetic field at location 2 in Figure P27.14 if the magnetic field magnitude at location 1 is \(0.27 \mathrm{~T}\). Note that real magnetic field lines spread out in...
-
Marin Company is currently producing 16,000 units per month, which is 80% of its production capacity. Variable manufacturing costs are currently $8.00 per unit. Fixed manufacturing costs are $56,000...
-
4.Indicate, by clicking on the relevant boxes, whether the following statements are true or false in relation to business valuation. The earnings yield method and the dividend growth model should...
-
B52 Skate Training prepares adjustments annually and showed the following on its June 30, 2023, year-end: Additional information available at year-end: a. The Prepaid Arena Rental of $182,000 was...
-
9313 "The following project is to be scheduled using the expected durations found using th e 3 point estimate formula All duration estimates are in weeks Note round to two decimal places"
-
Some neighbors of yours are hoping to open a Thai restaurant near a local community college. They have a limited budget so it is very important to them to have as good of an idea as possible of what...
-
Analytical procedures: a. are only done during the risk assessment phase of the audit. b. are substantive procedures and cannot be used at any other stage of the audit. c. are used at the risk...
-
What is the name of the amount of money that can be deducted directly from the computed tax, instead of from the taxable income?
-
Susan Campbell is thinking about launching a Web site to sell sports apparel for petite women. Shes designed a Web site but isnt sure if its userfriendly enough to launch. Provide Susan some concrete...
-
Tracing is: a. not a useful audit procedure. b. tracking source documents back to the underlying accounting records. c. the main audit procedure used to gather evidence on the existence assertion. d....
-
Name 3 things about your current economic system you would like to change, and briefly explain why.
-
In Problems 1522, find the principal needed now to get each amount; that is, find the present value. To get $750 after 2 years at 2.5% compounded quarterly.
-
The way a debtor accounts for the restructuring depends on the extent of the reduction in cash payments called for by the restructured arrangement. Describe, in general, the accounting procedure for...
-
On July 1, Orcas Lab issued a $100,000, 12%, 8-month note. Interest is payable at maturity. What is the amount of interest expense that should be recorded in a year-end adjusting entry if the fiscal...
-
Explain how to account for revenue on a long-term contract over time as opposed to at a point in time. Under what circumstances should revenue he recognized at the point in time a contract is...
-
If you look through a piece of very fine fabric at a tiny white light source, you will see a rainbow pattern. Explain the source of the pattern.
-
Antireflection coatings for glass usually have an index of refraction that is less than that of glass. Explain how this permits a thinner coating.
-
A physics instructor wants to project a spectrum of visible light colors from 400 nm to 700 nm as part of a classroom demonstration. She shines a beam of white light through a diffraction grating...
Study smarter with the SolutionInn App