What would be the interest expense in the first two years

Assignment Help Accounting Basics

Reference no: EM131956207

Problem

Patriots Inc. is interested in leasing a new air compressor from Kraft's Athletic Shop. The new 2015 model is selling for $99,900. Patriots can lease the machine for 7 years, with annual payments of $15,300. The machine has a useful life of 9 years. If Patriots Inc. borrows money they pay 3.5 percent interest. There are 4 criteria that determine whether a lease is treated as a capital lease. Based on the percentage of the asset's useful life criteria, would the lease be classified as an operating lease or capital lease? Based on the present value of the lease payments criteria, would the lease be classified as an operating lease or capital lease ? Assume the lease is a CAPITAL LEASE. What would be the interest expense in the first two years? What would be the depreciation expense for each of the first two years?

Reference no: EM131956207

Questions Cloud

Analyse the load vs time graphs and maximum demand : Obtain and analyse the load vs time graphs and maximum demand for each case - plotting the time Vs load curve from the 30 min profile under each case

What are the adjusted gross income amounts : Pat age 45 and his wife, Barb, age 44 are married with three children. What are the folowing amount? Adjusted Gross Income, Taxable Income and Total Income tax.

Do you implement rfid at hartsfield-jackson immediately : Describe the ways that the management team from Hartsfield Jackson will fulfill Mintzberg's managerial roles and subroles as it thinks through the decision.

Compute the breakeven point in units sold : Patsy smith is planning to sell her special knife for $15 per unit. She purchases units from a local distributor. Compute the breakeven point in units sold.

What would be the interest expense in the first two years : What would be the interest expense in the first two years? What would be the depreciation expense for each of the first two years?

Discuss your experiences with your partner : Find a job you'd like to have. Search through the newspaper and online ads and locate several detailed job descriptions for management positions.

Summarize the arguments for advising superfund : Summarize the arguments for advising SuperFund (through your New York office) that you consider the properties grossly overpriced at $42 million.

Find the new radius of path : If the speed of the particle is doubled and the magnetic field strength is quadrupled, find the new radius of path.

What do your subordinates expect from you on the job : Think about the skills and knowledge that you need to be effective in your job. What are they, and how did you acquire them?

User Account

All Pages