What is the amount of principal reduction recorded

Assignment Help Accounting Basics
Reference no: EM131603240

Question - Sheridan, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $274152, 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. Sheridan, Inc.'s incremental borrowing rate is 9% and the rate implicit in the lease (which is known by Sheridan, Inc.) is 7%. Assuming that this lease is properly classified as a capital lease, what is the amount of principal reduction recorded when the second lease payment is made in Year 2?

 PV Annuity Due PV Ordinary Annuity

7%, 4 periods 3.62432 3.38721

9%, 4 periods 3.53129 3.23972

Which one is the answer?

$223790

$274152

$185408

$209149

Reference no: EM131603240

Questions Cloud

Tructure of the investment policy statement ips : Select the most accurate description of the purpose and structure of the Investment Policy Statement ‘IPS’
Explain a suitable project management problem : Identify and explain a suitable project management problem that warrants research and define the problem in the form of a research question
Portfolio management applied to specific investor portfolio : Select the most accurate response to the statement ‘Portfolio Management applied to a specific investor’s portfolio includes the following areas of focus
What is the purpose of a bank reconciliation : Financial statements are a product of the accounting cycle. Think about two different companies: a manufacturing company, and a retail company.
What is the amount of principal reduction recorded : Assuming that this lease is properly classified as a capital lease, what is the amount of principal reduction recorded
Appropriateness of private-sector ceo pay and benefits : What are your predictions for the future regarding the level and appropriateness of private-sector CEO pay and benefits?
Discuss challenges in the long-term care continuum : How public policy has been used to improve the lives of our older adults or LTC residents
The budget and implementation of your facility : Create a 2-3slide Microsoft® PowerPoint® presentation with detailed speaker notes discussing the budget and implementation of your facility.
Identify the type of change : Identify the type of change Explain how the change was communicated Identify which leaders were involved in the communication

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd