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Describe, in bullet form, the capital lease criteria per GAAP




Question;1.) Describe, in bullet form, the capital lease criteria per GAAP.2.) Using the data below, what would be the appropriate GAAP entries for (1) the disposal of oldcopier and (2) recording of new copier? For any data missing, make relevant assumptions.? Company leases an existing copier (Old Copier)? Copier is classified as a capital lease on its books? Copier is 3yrs into its 5yr life? Due to certain requirements of the company they will be upgrading to a new copier? A deal has been struck that will allow the company to trade-in its existing copier for thenew one with some additional outlay? The new copier is also a lease for a similar 5yr term.Old CopierCash PriceLease PricePV of Lease paymentsImplied interest rateResidual Value at end ofLeaseUseful LifeTrade-in Credit onTransactionLease PaymentLength of LeaseBuyout at end of LeaseNew Copier$28,000$30,000$33,8351.45% p.a.$2,000$48,000$50,000$42,5760.85% p.a$15,000.005yrs$16,5006yrs$519/month$500/principal$19/interest5yrs$1$725/month$695/principal$30/interest5yrs$9,5003.) The Company had purchased $58,000 of inventory from Zahn (a supplier) approximately 3yrsago. As of today the balance of the remaining inventory was $18,674. This inventory is mostlikely obsolete and will not be used in the future.Zahn has offered to take back the inventory for future credit. Zahn is willing to offer a buy oneget one free deal based on the weight of the product returned.Below are the relevant details. What is the value of the inventory purchased under the buy oneget one free deal? What are the entries to record the obsolete & new inventory? For any datamissing, make relevant assumptions.Inventory on hand including obsolete inventoryWeight of inventory returned for buy one get one free dealWeight of inventory purchased under buy one get one free dealAmount paid for inventory purchased on buy one get one free deal- $76,852.00- 280g- 500g (250g is free,250g is purchased)- $19,681.00


Paper#43944 | Written in 18-Jul-2015

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