User Account

All Pages

What kind of lease is this to fenton company

Assignment Help Accounting Basics
Reference no: EM131761864

The following facts pertain to the lease agreement between Fenton Company and Goldson Corp.FentonCompany on January 1, 2015, enteredinto a five-year non-cancelable lease. The lease had four renewal options of one year each, for equipment having an estimated useful life of 10 years and a fair value to the lessor, GoldsonCorp., at the inception of the lease of $3,000,000. Fenton's incremental borrowing rate is 8%. Fentonuses the straight-line method to depreciate its assets. The lease contains the following provisions:

- Rental payments of $219,000 including $19,000 for property taxes, payable at the beginning of each six-month period.

- A termination penalty assuring renewal of the lease for a period of four years after expiration of the initial lease term.

- An option allowing the lessor to extend the lease one year beyond the last renewal exercised by the lessee.

- A guarantee by Fenton Company that Goldson Corp. will realize $100,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $60,000.

Instructions

(i) What kind of lease is this to FentonCompany?

(ii) What should be considered the lease term?

(iii) What are the minimum lease payments?

(iv) What is the present value of the minimum lease payments?

Reference no: EM131761864

Questions Cloud

Describe the rapport between you and the professional : Describe the rapport between you and the professional. Describe the circumstances of the interview.
What type of primary source is it : 1. What type of primary source is it? 2. What is the date or approximate date of the source and where was it created?
Analyze projected cost of college based on information given : Analyze projected cost of college based on information given. Determine accounts that can be transferred and/or consolidated.
Provide a brief description of the theory to the HE Sector : Based on the online clips and the theories they cover, critically evaluate their relevance to the Higher Education industry over the past 30 years
What kind of lease is this to fenton company : What kind of lease is this to Fenton Company, What should be considered the lease term
What are your reasons for preferring different interventions : How would you have handled this case? Please consider two different alternative methods for intervention. What would you have done differently?
Why did the fugitive slave act of 1850 : Why did the Fugitive Slave Act of 1850 pose a grave danger to free Blacks? How did African Americans and their white abolitionist allies resist the Fugitive?
Determine the dividends per share for preferred stock : Sandpiper Company has 15,000 shares of cumulative preferred 1% stock, $150 par and 50,000 shares of $5 par common stock.
Themselves and on subsequent generations down : Consider the impact of the Battle of Marathon and two other major events in Greek history of your choice on the Greeks themselves and on subsequent generations.

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.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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