Pirate inc. leased equipment from shoreline enterprises, Ask an Expert

Accounting

Pirate, Inc. leased equipment from Shoreline Enterprises under a four-year lease requiring equal annual payments of $180,000, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Pirate, Inc.'s incremental borrowing rate is 10% and the rate implicit in the lease (which is known by Pisa, Inc.) is 8%. Assuming that this lease is properly classified as a capital lease, what is the amount of interest expense recorded by Pirate, Inc. in the first year of the asset's life?

View complete question

Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9402966

Have any Question?Write your Review or question?

Related Questions in Accounting Basics

Question 1 company boards executives and management are

Question: 1. Company boards, executives, and management are investing more and more time and resources on issues of sustainability - such as carbon (greenhouse gas emissions), energy efficient technology, water use, clea ...

Question - a machine is purchased january 1 at a cost of

Question - A machine is purchased January 1 at a cost of $56,290. It is expected to produce 129,000 units and have a salvage value of $3,400 at the end of its useful life. Units produced are as follows: Year 1 10,400 Yea ...

Question - por corporation is an automobile manufacturer

Question - POR Corporation is an automobile manufacturer. POR has an unused piece of manufacturing equipment in one of its factories (i.e., a capital asset). POR has been approached by CIV Ltd., who would like to purchas ...

Question - dividend income susan owns shares of stock in a

Question - Dividend Income. Susan owns shares of stock in a corporation. In January 2018, she received a 1099-DIV reporting the following: Total ordinary dividends $526 Qualified dividends included in total dividends 450 ...

Question - alex acquires a residential rental property on

Question - Alex acquires a residential rental property on June 1, 2018 at a total cost of $423,000. Of this total, $132,000 can be allocated to the value of the land. He immediately spends $42,000 to make major improveme ...

Question - on january 1 2016 knorr corporation issued

Question - On January 1, 2016, Knorr Corporation issued $1,400,000 of 6%, 5-year bonds dated January 1, 2016. The bonds pay interest annually on December 31. The bonds were issued to yield 7%. Bond issue costs associated ...

Question - retained earnings at 111x was 150000 and at

Question - Retained earnings at 1/1/1X was $150,000 and at 12/31/1X it was $200,000. During 2010, cash dividends of $50,000 were paid and a stock dividend of $30,000 was issued. Both dividends were properly charged to re ...

Question - flounder corporation sold 3490000 7 5-year bonds

Question - Flounder Corporation sold $3,490,000, 7%, 5-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on January 1. Flounder Corporation uses the straight-line method to amortize bo ...

Question access the answer the questions and submit to me

Question: Access the answer the questions and submit to me via Canvas. 1. What is a sole proprietorship and how is it taxed? 2. Define the term "limited liability". 3. List the advantages of an "S" corporation 4. Define ...

Assessment conditionsassessment must be conducted in a safe

Assessment Conditions: Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the regulation, licensing and risk - risk managem ...

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

Recent Questions

Ask Accounting Basics Expert