Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

The following facts pertain to a noncancelable lease agreement between Franklin Financing Company and Jones Dairy Products, a lessee, for a milking system.

Inception date of lease is October 1, 2004.

Lease term is 8 years.

Economic life of leased equipment is 10 years.

Fair value of asset on inception date is $175,000.

Cost of equipment to Franklin is $160,000.

Unguaranteed residual value at end of lease term is $15,000.

Estimated salvage value at end of economic life is $ 10,000.

Franklin's implicit rate (unknown to Jones) is 9%.

Jones's incremental borrowing rate is 8%.

There are no important uncertainties surrounding costs yet to be incurred by Franklin. However, collectibility of the lease payments from Jones is not reasonably predictable or assured. Jones assumes responsibility for all executory costs, which amount to $9,500 per year. Executory costs are paid each October 1 beginning in 2004 and lease payments are to be paid each September 30 beginning September 30, 2005. The asset will revert to Franklin at the end of the lease term. The straight-line depreciation method is used for all equipment by both Franklin and Jones. Franklin's and Jones's accounting periods end on December 31 and September 30, respectively.

Pertaining solely to this lease, what is the amount of net income that Franklin will report on its income statement for the year ended December 31, 2004?
Pertaining solely to this lease, what is the amount of net loss that Jones will report on its income statement for the year ended September 30, 2005?

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946188

Have any Question? 


Related Questions in Accounting Basics

Reading concept summaryno plagiarism must be original

Reading Concept Summary **NO PLAGIARISM. MUST BE ORIGINAL. PLEASE USE REFERENCES IF NEEDED ** Write a 260- to 350-word summary of this week's readings. Please write about the following: Fixed Assets, Depreciation, and In ...

Project assignmentdo investors react to stock

Project Assignment Do Investors React to Stock Dividends? Financial accounting theory predicts that there should be no market reaction to a company's stock dividend. This is because the market value of the shares should ...

Audit report modificationsthe final paper will be based on

Audit Report Modifications The final paper will be based on Appendix 6C Illustrative Audit Case: Keystone Computers at pages 237-244 in your text. Write, in outline format but in complete sentences, a 6 to 10 page audit ...

Question 1the company you work for has a large amount of

Question 1 The company you work for has a large amount of disposable cash and very little debt on its books. The board of directors has expressed an interest in taking this money and investing in equity and debt securiti ...

How much did you borrow for your house if your monthly

How much did you borrow for your house if your monthly mortgage payment for a 30 year mortgage at 6.65% APR is $1,600?? A $218,080 B $202,503 C $186,926 D $233,658 E $249,235 F $264,812 Shady Rack Inchas a bond outstandi ...

Accounting assignmenttransfer pricing decisionsas a manager

Accounting Assignment Transfer Pricing Decisions As a manager, you may be tasked with making recommendations as to how your organization should structure its transfer pricing. This is especially true in cases when both v ...

Assume that you recently graduated and have just reported

Assume that you recently graduated and have just reported to work as an investment advisor at the onof the firms on Wall Street. You have been presented and asked to review the following Income Statement and Balance Shee ...

In your own words explain the recording process and the

In your own words, explain the recording process and the accounting equation to someone who has no accounting experience. Then, give your opinion on the elements or areas that might cause the most confusion or be the mos ...

This assignment will assess the following learning

This assignment will assess the following learning outcomes: - Demonstrate the impact on the financial statements and the implication for different users of accounts of alternative ways of treating controversial accounti ...

Assignment managerial accountingbackgroundperformance

Assignment: Managerial Accounting Background: Performance Drinks, LLC is owned by Dave N. Port. Performance Drinks produces a variety of sports centered drinks. They began operations in 1993 shortly after Mr. Port gradua ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro