Asset and liability in the financial records

Reference no: EM13137404

Johntech Inc. leased a new machine having an expected useful life of 30 years from Carbide Co. Terms of the noncancelable 25-year lease were that Johntech would gain title to the property upon payment of a sum equal to the fair market value of the machine at the termination of the lease. Johntech accounted for the lease as a capital lease and recorded an asset and a liability in the financial records. The asset recorded under this lease should properly be amortized over:

a. 5 years (the period of actual ownership).

b. 22.5 years (75 percent of the 30-year asset life).

c. 25 years (the term of the lease).

d. 30 years (the total asset life).

Reference no: EM13137404

Questions Cloud

Essay on what makes a scientific theory, a scientific theory : Write an essay on the following : What makes a scientific theory, a scientific theory

Risk assessment : LEARNING OUTCOMES BEING ASSESSED 1. Demonstrate an understanding of the principles underlying the development of marketing strategies, especially in relation to services and consumer goods; 2. Describe the role of the marketer, and the marketer's con..

Explain what is the acceleration of the aircraft : What is the acceleration of the aircraft (in m/s2)? How long does it take the aircraft to reach its take-off speed?

How many ways can five taxi drivers be assigned to six cars : Last semester a certain professor gave 13 as out of 285 grades. if grades were assigned randomly what is the probability of an A.

Asset and liability in the financial records : Johntech accounted for the lease as a capital lease and recorded an asset and a liability in the financial records. The asset recorded under this lease should properly be amortized over:

Which basis of allocating the cost is most likely : If the cost of ZZ is allocated to the X and Y products on the basis of the number of gallons produced, how much of the total cost of the 400 drums should be charged to each product?

Explain how a monopolist can increase profits : What is the main difference between the demand curves for the perfect competitor and the monopolist? Explain the difference between the firm's demand curve for each and then for the market for each.

Explain horsepower and efficiency of three-phase motor : Horsepower and efficiency of three-phase motor, If a fully loaded 440V, three-phase motor draws 12.4 A at 86% power factor (pf). It's speed is 1730 rpm and its torque output to a mechanical load is 29.1 lb-ft x 1.356 = 39.5 Nm.

Identify population and sample for humidity set : The amount of food consumed by each rat with humidity set at 20% and again with humidity set at 60%. For this study, identify (a)the population and (b) the sample.

User Account

All Pages