20-13 Fish & Chips Inc., Part I Lease Analysis A. 1.If an incontrovertible is purchased, it essentialiness be shown on the left-hand side of the vestibular sense sheet, with an offsetting debt or truth entry on the right-hand side. However, if an asset is leased, and if the lease is non classified as a capital lease, because it does non have to be shown directly on the balance sheet, but, rather, must only be reported in the footnotes to the companys financial statements. A. 2.Capital leases argon differentiated from operating leases in third respects: (1) they do not provide for sustentation service, (2) they are not cancelable, and (3) they are goody amortized. (That is, the lessor receives rental payments that are reach to the full price of the leased computer schema plus a return on the investment.) A. 3.Leasing is a fireman for debt financinglease payments, like debt payments, are contractual obligations that if not met volition force the crocked i nto bankruptcy. Thus, leasing uses up a firms debt capacity. To illustrate, if Fish & Chips optimal capital structure is 50% debt and 50% equity, and if the firm leases half its assets, then the other half should be financed by common equity. B. 1.In order to unsex the cost of owning, it is initiatory necessary to construct a depreciation schedule. This schedule is devoted below. disparagement schedule: depreciable basis = $1,200,000.
| |MACRS |Depreciation |End-of-Year | |Year | cons! ider |Expense |Book Value | |1 |0.33 |$ 396,000 |$804,000 | |2 |0.45 |540,000 |264,000 | |3 |0.15 |180,000 |84,000...If you want to get a full essay, order it on our website:
OrderCustomPaper.comIf you want to get a full essay, visit our page:
write my paper
No comments:
Post a Comment