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Using the data below, what would be the appropriate GAAP entries for

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Question;Using the data below, what would be the appropriate GAAP entries for;(1) the disposal of old copier and;(2) recording of the new copier?;For any data missing, make relevant assumptions.;-Company leases an existing copier (old copier);-Copier is classified as a capital lease on books;-Copier is 3 yrs 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 the new one with some additional outlay;-The new copier is also a lease for a similar 5 year term.;Old Copier Cash Price: $28,000 Lease Price: $30,000 PV of lease payment: $33,835 Implied Interest Rate: 1.45% p.a. Residual Value at end of lease: $2,000 Useful Life: 5yrs Trade in credit on transaction: $16,500 Lease Payment: $519/month ($500 principal, $19 interest) Length of lease: 5yrs Buyout at end of lease: $1 New Copier Cash Price: $48,000 Lease Price: $50,000 PV of lease payment: $50,000 Implied Interest Rate:.85% p.a. Residual Value at end of lease: $15,000 Useful Life: 6yrs Trade in credit on transaction: $0 Lease Payment: $725/month ($695 principal, $30 interest) Length of lease: 5yrs Buyout at end of lease: $9,500

 

Paper#44233 | Written in 18-Jul-2015

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