Personal statement for PHD admission Essay Example | Topics and Well Written Essays - 500 words

Personal statement for PHD admission - Essay Example Likewise, my Bachelor’s degree represented a total GPA of 3.13; with a major in Computer Engineering. Pior diplomas and associate’s degrees were earned in Computer Networking Techniques and Mechanical Technology; with respective GPAs in excess of 3.7. As can be noted from this cursory examination of prior scholarship, my interests in this field have not come to me recently; instead, they have been the result of a lifelong interest in science and technology; as well as an overarching interest in how efficiency can be achieved and greater usefulness represented to broader humanity from existing and newly developed technologies. As I am currently within my very last semester of my Master’s program, I am only taking one course at the current time; ECE602. As such, with all of my available free time devoted towards achieving the highest grades possible within this particular course, I am confident that my GPA will increase from the point that has been listed currently. A further rational for seeking to apply for this Ph.D. program is contingent upon the fact that I have a great deal of familiarity working with Professor Chien; an individual who has proved instrumental in guiding me throughout my graduate work thus far. Upon asking him as to whether or not he would work with me as a potential graduate student, Professor Chien readily agreed. This is partially due to the fact that I have had a long working relationship with him over the course of ECE471, ECE487, and ECE488; all of which I served as a TA for him. Furthermore, my working relationship with Professor Chien extends beyond merely working as a TA; as last summer Professor Chien inquired as to my availability for TASI (Transportation Active Safety Institute). While working on this project, I worked closely with both Professor Chien and stakeholders within Toyota as we worked to develop a car safety project that utilized distance sensors as a means of effecting safety

Google Essay Example | Topics and Well Written Essays - 1000 words

Google - Essay Example This paper describes the Google search engine and tells more about Google Inc. The company started from nearly 2 million websites in its database in 1998, which grew up to a trillion websites just after twelve years showing the speed of the growth of this search engine. No other search engine has shown such a rapid increase in its website database as yet which is one of the many signs for Google to remain the market leader at least for the next decade. Another noticeable point is that the interface of the Google search engine is very user-friendly. Users can find their required web pages using customized setting. If a user wants to find some book, he/she can search that book using ‘Google Books’ search. Similarly, if a user wants to find a scholarly journal, he/she can search it using ‘Google Scholar’ search. Google also makes use of rating mechanism, which helps in retrieving the most relevant websites. Other search engines can hardly differentiate between the relevant and irrelevant web pages because of which they generate all those websites in which the key words exist regardless of their relevance. On the other hand, Google makes use of rank-ordering system, which puts the most relevant websites at the top positions. Google does not rank pages on the basis amount of information that they contain about any particular topic, rather it ranks pages based on the amount of relevant data or information. This feature also distinguishes Google from other search engines and points towards Google’s dominance in internet search over the next decade. Answer No. 4 Google’s attempts to launch new products have been remarkable and successful so far. Whatever products Google has launched until now have played a considerable role in increasing the yearly revenue and net income of the comp any. The thing is that there is always a well-planned strategy behind the launch of every Google product which ensures long-term success of the product in local and international markets. The company makes use of latest and well-equipped information technology infrastructure to create new products. Some of the main products which have proven to be highly productive for the company include Google search tools, language tools, advertising services, publishing tools, communication tools, and Google statistical tools. These are just the broad categories of Google products. The actual product line includes a wide range of products under each category. Google has also entered the world of web browsers, email, and mobile internet. From the usage rates of all of these products, it is evident that the company has been successful so far in each of these fields. For example, nearly 100 million people use

Juvenile Delinquency And Gangs Criminology Essay

Juvenile Delinquency And Gangs Criminology Essay A juvenile gang is an anti-social or any criminal act that is evident among children or adolescents. Juvenile delinquency is a legal term referring to how the children and adolescents behave and is viewed by the adults as a crime that needs to be judged under law (Columbia Encyclopedia, 2010). Its meaning and age limit differs in different countries, with some setting the juveniles maximum age limit to be fourteen years while others may be as high as twenty one years. In many countries, those people that fall between the ages of sixteen to twenty years are considered as adults, and it is within this age group that the high crime incidence rate is evident. Some major factors that are attributed to development of bad behaviors are psychological, social and economic factors. Juvenile crime and delinquency are serious problems in the whole world. Extend of effects depends mostly on the social, economic and cultural conditions in every country. Due to difficult times in economy of a country evident by less trade and unemployment, there has been an increase in juvenile criminality. Poor socio-economic environment that is shaped by poverty and destitution have contributed to poor social background involving violence (Gordon, 2006). The likelihood of becoming a victim of violence is much higher for gang members than it is for members of other peer groups (Gordon, 2006). Most of the criminal cases that are evident among the adults are usually based on their bad behaviors when they were young. A criminal offense that is frequently committed by the children is theft and other bad behaviors like rape and more serious property destruction is usual ly evident at later age. There are differential offending patterns among the minority (black) and the white youths. According to Charish, Sebastian Kelly (2004), the minority youths were much more likely to have prior and chronic histories for delinquency. The Africa American youths were arrested with serious violent crimes than the whites, the report also concluded. The homosexuality have led high incidence of gay and lesbian youths to attempt suicide and involvement in juvenile delinquencies that can eventually lead to self destruction. Religion is believed to exist to give people a false hope for the future and to keep people motivated during the present. According to Jensen and Rojek (2003), they stated that social order could be maintained only if people had common beliefs in something greater than themselves. In addition, religion has made people to be less involved in criminal and fully engage in their social roles and ignoring oppressions of their economic systems. One of the ways through which religion can improve societys ethical well being is through reducing crime rates. However, this statement will only be justifiable if analysts truly prove that there is significant relationship between religion and crime. The disorganization in families that can lead to emotional maladjustments plays an important role in arising of many delinquents (Gordon, 2006). In many cities adolescents usually forms a gang in which many young people are involved by acquiring these bad behaviors. After the development of juvenile court, there was an effective judgment among the youthful offenders and the adults. These systems have been campaigning for informal procedure and corrections, a duty that is assigned to psychiatric clinicians, rather than punishment. In early nineteenth century, the juvenile correction centers shave been separated from prisons. Even though these centers are not adequate, they have immensely participated in the development of rehabilitation programs, provision of vocational training and psychiatric treatment. The parole systems, foster homes, child guidance clinics and public juvenile protective agencies have played a great role in correction of delinquent and maladjusted children (Gordon , 2006). Multicultural Issues and Ethnical Implications Race or Ethnicity Various multicultural issues have become of major concern in many of the juvenile delinquencies. Race or ethnicity has proven to be of hindrance to equal justice for all in western countries especially in America. A report showing that the number of imprisoned minority youth was gradually increasing even when the number of their arrests declined clearly proves that there was no fairness in the juvenile courts, (Charish, Sebastian Kelly, 2004). The inappropriate representation of the minority youth is attributed to greater involvement of the minority youth in crime and also unequal treatment of minority youth in juvenile courts. There is an evidential great difference in the offending pattern basing on the racial and ethnic groups. The American government perceived the fact that the high number of black youths in the juvenile courts revealed their greater involvement in criminal activities. The greater involvement of the minority youth in crimes than the whites is largely contributed to their social status in the surrounding environment. There is a high degree of injustices that are evident in the authority systems. The research have shown that race and gender effects are of great significance for juveniles of which those from rich white families receives government assistance while the poor blacks faces harsher juvenile justice decisions, (Charish, Sebastian Kelly, 2004). The African American juvenile delinquents were more likely than the white youths to be detained, have their petitions filed and were less likely to be placed on probation at fist intake. The gender effects were also evident in the juvenile system process. It was shown that the females had low chances of being detained, have their petitions filed, transferred to adult courts, high chances of having their petitions filed and were more likely to be placed in custody if they were adjudicated by the juvenile courts. According to Charish, Sebastian Kelly (2004), in the American rural cities, the African American youth had greater chances of having their cases being dismissed than among the whites. The Hispanic youths had low chances to have petitions filed on their cases compared to the whites. However, if they were adjudicated they would be more preferably placed in custody than the white youths. African American and Hispanic juvenile delinquents caught with the first offence received greater preference to have their cases dismissed than the whites with their first criminal judges. Those Hispanic youths that were first time criminal offenders and had been adjudicated had high degree to be placed in custody than the whites with same offence. Homosexuality Violence against gay males and lesbians, of which many of them are young people, has emerged as a significant social problem (Gordon, 2006). Juvenile delinquency holds negative, ambivalent and defensiveness towards homosexuals. Homosexuality is perceived to be a very common moral behavior and it has been known to exist in about fifty percent of the male population. The problems of sexual abuse experienced by these people have led them to engage in violent acts in society. Some other young children runs out of their families to the streets when they are discovered as lesbians or gays and thus ending up as street robbers or gets involved in other criminal acts. Some males involved in homosexuality may go against the society bearing hatred in their hearts and these may lead to development of delinquency with the likelihood of these young people joining youth gang and be incarcerated during their adolescent age (Action Committee against Violence, 2003). It has been evident that most of the male rapes in our society take place in prison (Gordon, 2006). The existences of homophobia among the homosexuals have resulted in many problems, including high rates of suicidal behavior. A conclusion is based on the fact that, when a society imposes a sense of self-hatred to minority group, they are forced to adapt high rates of suicide, substance abuse, violence and creation of individuals characterized with difficulties in having love relationships. Homosexuals are not criminals and incarceration is not the best way to solve the problems brought by homosexuality. They should be pursued to change through the psychiatric treatment rather than imprisonment. The homosexuals are known to suffer from torture, ill-treatment and violence at the hands of fellow inmates and also prison officials (Gordon, 2006). Religion The power and influence of religion on delinquency is much more perplexing than the media or acts of community (Jensen Rojek 2003). Religion being such a controversial, sensitive issue and being viewed from different levels has proved to be difficult to understand its impacts on juvenile delinquency. But in other hand, religion is known to play an important role in influencing the behavior of people, sets values for society and correlates with delinquencies in several ways. Crime and religion have for years going through different studies that seek to explore their relationship. Religion is said to bring social order in society since people would have a common belief on something greater than themselves. Religious involvement throughout adolescents significantly lessens the risk of later adult criminality. In addition religion leads to development of empathy within the youths and this helps to prevent high risk of urban youths from delinquent behavior (Jensen Rojek 2003). Despite a ll these, it is evident that there are negative values associated with religion and crime. Religious groups have participated in violent acts in the name of their religious causes. Religious crimes such as the bombing of abortion clinics and the trashing of adult bookstores were all done in regard of strong faith, (Jensen Rojek 2003). Difference in religious backgrounds between the parent and the child can lead to argumentative issues that increase the risk of delinquencies. Socioeconomics One of the most common factors that contribute to the occurrence of delinquent behaviors among the juveniles is poverty (Jensen Rojek 2003). Those children that are brought up in poor families are likely to face more economic strain and in trying to obtain their daily needs. The juveniles in jurisdiction who are wealthier are treated less severely by juvenile justice decision makers compared to the poor juveniles. According to Gordon (2006), the studies that were carried out showed that juvenile punishment not only responds to crime, but also to specific community conditions. The development of numerous programs that are meant to lower delinquency rates have led to economic drain since most of them are established of which many do not function effectively. The more efficient programs are those established before occurrence of delinquent behaviors and aims at preventing that behavior. This means that the childrens behavior at early age is detected and any precaution can be taken. More severe antisocial outcomes are related to early adoption of eloquent behaviors. Children with low intelligent capacity who have poor performance in school face physical abuse from the parents which in turn leads to delinquent outcomes (Alina, 2009). Besides the socioeconomic status, the effects of child rearing practices play a great role in determining the childs behavior. Those children that are raised by distressed and unsupportive families had higher possibility of developing delinquent behaviors than those from supportive families. The difference in the social status between the urban and rural areas youth have resulted to varied crime rates. Crime rates in urban are higher than in rural because of the occurrence of slums, overcrowded settlements and lack of basic services. Delinquency rates are high in the more economically and technologically advanced countries (Alina, 2009). Conclusion Juvenile delinquency is a serious problem all over the world that not only affects the victim of the crime but also juvenile delinquents family, their future and society at large. Juvenile delinquency covers a wide range of violations of legal and social norms ranging from smaller to severe crimes committed by minors. Young people living in harsh situations like poverty, dysfunctional families, substance abuse and death of family members are at a risk of becoming delinquent. The occurrence of juvenile delinquency is roundly attributed to both biological and social effects. The Childs behavior is based on existence of more abstract context of socialization. The major prominent forces that are sources of delinquency are the media, community and religion. The minority youth group are highly involved in crime and receives harsher juvenile justice system treatment than white youths. Racial disparity exists in the absence of differential treatment. More studies have shown occurrence of dis crepancies in law enforcements treatment of minority group. In order to get rid of delinquent children in the society, the community should actively involve themselves in providing essential services for the well being of their children.

Husband Battering Essay -- essays research papers

Husband Battering: A Serious Problem Billboards, radio, and TVads across the country proclaim that â€Å"every fifteen seconds a women is beatenby a man.† Violence against women is clearly a problem of national importance,but has anyone ever asked how often men are beaten by women? The unfortunatefact is that men are the victims of domestic violence at least as often aswomen are. While the very idea of men being beaten by their wives runs contraryto many of our deeply ingrained beliefs about men and women, female violenceagainst men is a well-documented phenomenon almost completely ignored by boththe media and society. The first reaction uponhearing about the topic of battered men, for many people, is that of incredulity.Battered husbands are almost a topic for jokes - such as the cartoon image of awoman chasing her husband with a rolling pin. One researcher noted that wiveswere the perpetrators in 73% of the depiction of domestic violence in newspapercomics (Gelles 1974). Battered husbands have historically been eitherignored or subjected to ridicule and abuse. In 18th-century France, a batteredhusband "was made to wear an outlandish outfit and ride backwards aroundthe village on a donkey" (Langley & Levy 1977). Even those of us wholike to consider ourselves liberated and open-minded often have a difficulttime even imagining that husband battering could take place. Although feminismhas opened many of our eyes about the existence of domestic violence, and newspaperreports often include incidents of abuse of wives, the abuse of husbands is ararely discussed phenomenon. One reason researchers andothers had not chosen to investigate husband battering is because it wasthought to be a fairly rare occurrence. Police reports seemed to bear this out,with in some cases a ratio of 12 to 14.5 female victims to every one malevictim. But another reason is that because women were seen as weaker and morehelpless than men due to sex roles, and men on the other hand were seen as moresturdy and self-reliant, the study of abused husbands seemed relativelyunimportant (Steinmetz 1978). In 1974, a study was done which compared male andfemale domestic violence. In that study, it was found that 47% of husbands hadused physical violence on their wives, and 33% of wives had used violence ontheir husbands (Gelles 1974). Half of the respondents in... ...involves denying thatwomen are victims. Women’s groups that help battered women could also helpbattered men, while men’s groups that counsel abusive men could make theirexpertise available to violent women as well. Continuing to portrayspousal violence solely as a women’s issue is not only wrong – it’s alsocounterproductive. And encouraging such unnecessary fragmentation anddivisiveness will ultimately do more harm than good. No one has, or shouldhave, a control on pain and suffering. But until society as a whole confrontsit’s deeply embedded stereotypes and recognizes all the victims of domesticviolence, we will never be able to solve the problem. Domestic violence is aneither a male or a female issue – it’s simply a human issue. References Farrell, W. (1986). Why men are the way they are.New York: McGraw-Hill. Gelles, R. (1974). The violent home: a study ofphysical aggression between husbands and wives. Beverly Hills: Sage. Langley, R., Levy, R. (1977). Wife beating: thesilent crisis. New York: Pocket Books. Mercy, J., Saltzman, L. (1989, May) â€Å"Fatal violenceamong spouses in the United States, 1976-85† American Journal of Public Health,79, 595-599.

Chapter 21 Lease Answer Problems

CHAPTER 21 ACCOUNTING FOR LEASES CONTENT ANALYSIS OF EXERCISES AND PROBLEMS Time Range (minutes) 5-10 Number E21-1 Content Operating Lease. (Easy) Annual rental payments, no renewable option clause, executory costs. Lessee's journal entries to record agreement, payments, expenses. Capital Lease. (Moderate) Calculation of rental payments made at end of year. Table summarizing lease payments, interest expense. Journal entries. IFRS differences. Capital Lease. (Moderate) Payments made at beginning of year. Table summarizing lease payments, interest expense. Journal entries.Direct Financing Lease. (Moderate) Calculation of rental receipts, made at end of year. Table summarizing rental receipts, interest revenue. Journal entries. Direct Financing Lease. (Easy) Journal entries to record contract, first rental receipt. Direct Financing Lease / Capital Lease. (Moderate) Table summarizing lease and interest payments. Journal entries for lessor and lessee. Sales-Type Lease. (Moderate) Payments made at end of year. Calculation of selling price (fair value). Table summarizing lease receipts, interest revenue. Journal entries. Sales-Type Lease. Moderate) Payments made at beginning of year. Calculation of selling price (fair value). Table summarizing lease receipts, interest revenue. Journal entries. Sales-Type Lease / Capital Lease. (Moderate) Computation of lease payments. Journal entries for lessor and lessee. Operating Lease / Sales-Type Lease. (Moderate) Accounted for as operating, should have been sales-type. Computation of effect on net income. Operating Lease. (Easy) Computation of income derived from lease by lessor, amount of rent expense for lessee. E21-2 15-25 E21-3 10-15 E21-4 10-15 E21-5 E21-6 5-10 10-15E21-7 10-15 E21-8 10-15 E21-9 E21-10 10-15 10-20 E21-11 10-15 21-1 Number E21-12 Content Determining Type of Lease. (Moderate) Title passes at leaseend, collectibility reasonably assured, no uncertainties surrounding costs to be incurred. Table summarizing recei pts, revenue. Lessor's journal entries. Guaranteed and Unguaranteed Residual Values. (Moderate) Calculate residual value. Determine classification of the lease depending on the type of residual value. (Appendix). Sales-Leaseback. (Easy) Calculation of lease payments. Lessor's journal entries to record sale and agreement.Description of how to treat the gain by the lessee. Determining Type of Lease. (Moderate) No bargain purchase option, no agreement to transfer ownership at lease-end, no uncertainties surrounding costs to be incurred. Journal entries for lessee and lessor. Guaranteed residual value. Determining Type of Lease. (Moderate) Lessor's viewpoint. Option to buy, collectibility reasonably assured, no uncertainties surrounding costs. Journal entries, disclosure requirements. Capital Lease. (Moderate) Calculation of rental payments. Table summarizing lease payments, interest expense.Journal entries, partial balance sheet. IFRS differences. Direct Financing Lease. (Challenging) Table summarizing lease receipts, interest revenue. Explanation of lease classification. Journal entries. Partial balance sheets. Comprehensive: Direct Financing and Capital Lease. (Challenging) Computation of rental amounts. Table summarizing lease and interest receipts. Analysis of lessee's lease classification. Journal entries for lessor and lessee. Comparative financial statement presentation. Direct Financing Lease. (Moderate) Unguaranteed residual value. Computation of rental amounts.Table summarizing lease and interest receipts. Journal entries. Sales-Type Lease. (Challenging) Calculation of implied selling price. Table summarizing lease receipts, interest revenue. Explanation of lease classification. Journal entries, partial balance sheet. Various Lease Issues. (Challenging) Journal entries for lessee and lessor to record all lease transactions. Various Lease Issues. (Challenging) Computation of annual rentals if payable at beginning of year, at end of year. Table. Journal e ntries for lessee and lessor. Partial balance sheet disclosures. 21-2Time Range (minutes) 15-20 E21-13 15-25 E21-14 15-20 P21-1 30-40 P21-2 25-35 P21-3 30-50 P21-4 35-50 P21-5 45-60 P21-6 30-40 P21-7 30-45 P21-8 P21-9 30-45 45-60 Number P21-10 Content Initial Direct Costs. (Moderate) Analysis for various lease classifications. Determination of lessor's lease classification. Discussion of lessor's journal entries. Various Lease Issues. (Challenging) Classification of lease for lessee, for lessor. Option to buy, collectibility reasonably assured, no uncertainties. Lessor journal entries. Accounting for a change in residual value. Accounting for Leases. Challenging) Journal entries to record the lease for both the lessee and lessor. (AICPA adapted). Lessor's Income Statement. (Challenging) Preparation of lessor's income statement, including sales-type and operating lease as well as long-term construction contracts. (Appendix). Determining Types of Leases. (Moderate) For lessee, for les sor. Lease of land. No bargain purchase option, collectibility reasonably assured, no uncertainties surrounding costs. (Appendix). Sales-Leaseback. (Moderate) Classification of lease by lessee. Journal entries for both lessee and lessor. Time Range (minutes) 20-30P21-11 30-45 P21-12 P21-13 30-45 50-60 P21-14 10-20 P21-15 20-30 ANSWERS TO QUESTIONS Q21-1 Q21-2 GAAP provides a common set of criteria for determining the classification of leases by both the lessee and the lessor. The advantages of leasing for the lessee include: 1. Financing benefits: a. b. c. The lease provides 100% financing so that the lessee acquires the asset without having to make a down payment. The lease contract may contain fewer restrictive provisions for financing. The leasing arrangement creates a claim that is against only the leased equipment and not against all assets. 2.Risk benefit: The lease may reduce the risk of obsolescence for the lessee. 3. Tax benefit: For income tax purposes, the lessee, through deduction of the lease payment, can write off the full cost of an asset. 4. Financial reporting benefit: For operating leases, the lease does not add an asset or a liability to the lessee's balance sheet. 5. Billing benefit: For certain contract-type work, leasing may permit higher charges because interest on borrowed money to purchase assets is not usually allowed as a contract charge, whereas the interest element contained in the rental payments is allowed as a contract charge. 1-3 Q21-3 By structuring the terms of the lease so that it qualifies as an operating lease, the lessee avoids having to include the asset and the liability in the balance sheet. Exclusion of these items creates more favorable financial ratios, such as rate of return on investment, the current ratio, and the ratio of debt to equity. This, in turn, may increase the borrowing capacity of the lessee. The lessee is practicing â€Å"off balance sheet financing. † A capital lease, on the other hand, would appear in the financial statements and affect financial ratios.It may impede lessee borrowing efforts. a. A lease is â€Å"an agreement conveying the right to use property, plant, or equipment (land and/or depreciable assets), usually for a stated period of time. † b. A sales-type lease for the lessor is a lease that meets any one of the Column A criteria and both of the Column B criteria in Exhibit 20-2, and results in a manufacturer's or dealer's profit. c. A direct financing lease for the lessor is a lease that meets any one of the Column A criteria and both of the Column B criteria, and does not result in a manufacturer's or dealer's profit. d.A sale-leaseback transaction is a lease transaction in which the owner of an asset sells it, and then immediately leases it back from the buyer. e. An operating lease for the lessee is a lease that meets none of the Column A criteria. For the lessor, it is a lease that meets none of the Column A criteria, and fails at least one of t he Column B criteria. f. A leveraged lease is a three-party lease in which one party (the equity participant) buys or manufactures an asset and leases it to another party (the asset user), with a third party (the debt participant) providing nonrecourse financing for the transaction.Q21-4 Q21-5 a. Inception of lease is the date of the lease agreement; or, if the leased property is being constructed, the date that the title passes to the lessor. b. Bargain purchase option is a provision allowing the lessee to purchase the leased property at the end of the life of the lease at a price so favorable that the exercise of the option appears, at the inception of the lease, to be reasonably assured. c. Unguaranteed residual value is the portion of the estimated residual value of the leased property that is not guaranteed by the lessee or by a third party unrelated to the lessor. . Implicit interest rate is the interest (discount) rate that, when applied on a present value basis to the sum of the minimum lease payments and any unguaranteed residual value accruing to the lessor, causes the resulting present value to be equal to the net investment of the leased property to the lessor. 21-4 Q21-5 (continued) e. Initial direct costs are costs incurred by the lessor to originate a lease that (1) result directly from acquiring that lease and (2) would not have been incurred had that leasing transaction not occurred.They also include costs directly related to specified activities performed by the lessor for that lease, such as evaluating the lessee's financial condition, negotiating lease terms, preparing and processing lease documents, and closing the transaction. Q21-6 If there is a bargain purchase option, the components of the minimum lease payments are: (1) the minimum periodic rental payment required by the lease over the lease term, and (2) the payment required by the bargain purchase option.Otherwise, they include (1) the minimum periodic rental payments plus (2) any g uarantee by the lessee of the residual value, and (3) any payments upon failure to renew or extend the lease. The criteria for a capital lease are: 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Lease term is 75% or more of the estimated economic life of the asset 4. Present value of minimum lease payments is 90% or more of fair value of the leased property to the lessor One (or more) of these criteria must be met for the lessee to classify a lease as a capital lease.Q21-8 Under an operating lease, the lessee records each rental payment as rent expense; no amount is capitalized. The lessor records each rental receipt as rent revenue. The leased asset is retained on the lessor's books and is depreciated by the lessor. Under a capital lease, the lessee records the present value of the minimum lease payments as both an asset and a liability. The lessee recognizes a portion of each payment as interest expense to produce a constant rate of interest on the book val ue at the beginning of the period, and recognizes the remainder of the payment as a reduction of the lease obligation.The lessee depreciates the asset over the term of the lease, unless there is a bargain purchase option or transfer of ownership at the end of the lease, in which case the depreciation period is the economic life of the asset. The two additional criteria for a sales-type lease are: 1. Collectibility of the minimum lease payments is reasonably assured. 2. No important uncertainties surround the amount of unreimbursable costs yet to be incurred by the lessor under the lease. In addition, the lease must result in a manufacturer's or dealer's profit or loss.Q21-7 Q21-9 Q21-10 21-5 Q21-11 The basic difference in accounting for a sales-type lease is that the carrying value of the asset is charged to cost of asset leased (expense), and the present value of the minimum lease payments is recorded as the amount of the sale. In a direct financing lease, no sales or expense is re cognized. Instead, the asset is removed from the books and the difference between its carrying value and the undiscounted minimum lease payments is recorded as unearned interest revenue.The net investment in a sales type lease is accounted for in a similar manner to that for a direct financing lease. The FASB states that the interest revenue from a lease is recognized so as to yield a constant return on net investment. Compound interest techniques can be used to compute this return if the following are known: (a) the amount of the lease payment, (b) the cost or fair value of the lease, and (c) the number of periods of the lease. Multiplying the interest rate by the amount of the net investment at the beginning of the year results in a constant return on investment.Q21-12 Q21-13 Q21-14 Owens Company records the lease as a capital lease due to the bargain purchase option, and depreciates the asset over its estimated economic life. The original lease was a capital lease and McFarland C ompany is relieved of its obligation. McFarland removes the equipment from its books, and recognizes the gain when the new lease transaction takes place, that is, during the current year. a. Lessee's disclosure: 1. For all leases, a general description of the leasing arrangement 2.For operating leases having lease terms in excess of one year: (a) Future minimum rental payments required as of the date of the latest balance sheet presented, for each of the 5 succeeding fiscal years and in total The total of minimum rentals to be received in the future under noncancellable subleases Q21-15 (b) 3. For all operating leases, rental expense for each period 4. For capital leases: (a) (b) The gross amount of assets recorded under capital leases by major classes according to nature or function Future minimum lease payments for each of the 5 succeeding fiscal years and in total 21-6 Q21-15 (continued) a. 4. continued) (c) (d) The total of minimum sublease rentals to be received in the future u nder noncancellable subleases Assets, accumulated depreciation, depreciation expense, and liabilities b. Lessor's disclosure: 1. A general description of all leasing arrangements 2. For operating leases: (a) The cost and carrying amount, if different, of property on lease or held for leasing by major classes of property, and the amount of the total accumulated depreciation Minimum future rentals on noncancellable leases for each of the 5 succeeding fiscal years and in total Total contingent rentals included in income for each period b) (c) 3. For direct financing and sales-type leases: (a) The components of the net investment in direct financing and sales-type leases including: (1) (2) (3) (4) (b) (c) Q21-16 Q21-17 The future minimum lease payments to be received Including any profit thereon The unguaranteed residual values accruing to the benefit of the lessor For direct financing leases only, initial direct costs Unearned income Future minimum lease payments to be received for eac h of the 5 succeeding fiscal years Total contingent rentals included in income for each periodIFRS classify leases as either finance leases or operating leases. A finance lease is equivalent to a capital lease under U. S. GAAP. In general, IFRS provide a series of indicators that, individually or in combination, normally lead a lease to be classified as a finance lease. U. S. GAAP contains a series of four criteria which, if any one is met, will result in the classification of a lease as a capital lease. While these indicators and criteria are similar, the IFRS indicators are less detailed and require more judgment in classifying leases. Specifically, both IFRS and U.S. GAAP treat leases that transfer title from the lessor to the lessee and leases that contain bargain purchase options as finance (capital) leases. However, if an asset is leased for the major part of an asset’s economic life, IFRS consider this an indicator of a finance lease. IFRS do not define what is meant b y â€Å"substantially all† of the asset’s fair value while U. S. GAAP sets a 90% threshold. 21-7 Q21-18 The primary accounting issue in accounting for a sales-leaseback transaction from the seller-lessee's viewpoint is the recognition of a profit or a loss on the sale.Any profit or loss is deferred and amortized in proportion to the amortization of the leased asset, if a capital lease, or in proportion to the rental payments, if an operating lease. If the fair value of the property is less than its undepreciated cost at the time of the transaction, a loss is recognized immediately on the difference between the undepreciated cost and the fair value. The fact that there are three or four parties (equity participant, asset user, debt participant, and also a manufacturer if the equity participant does not make the product) distinguishes a leveraged lease from other leases.For the lessee there are no new accounting issues. The lessee classifies and accounts for the lease as for a nonleveraged lease. Q21-19 ANSWERS TO MULTIPLE CHOICE 1. 2. a b 3. 4. d b 5. 6. a c 7. 8. b c 9. 10. a d 21-8 SOLUTIONS TO REVIEW EXERCISES RE21-1 1. 2. 3. 4. Classification Criteria Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of minimum lease payments is 90% or more of fair value Criteria Met? No No No No It is 40% (8 ? 20 years) It is 50% ($50,000 ? $100,000) Remarks Therefore, this lease is an operating lease.It does not meet any of the criteria. RE21-2 Rent Expense Cash 10,000 10,000 RE21-3 1. 2. 3. 4. Classification Criteria Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of minimum lease payments is 90% or more of fair value Criteria Met? No No No Yes It is 71% (5 ? 7 years) It is 100% ($250,000 ? $250,000) Remarks Therefore, this lease is a capital lease. It meets one of the four criteria. RE21-4 Jan, 1 Leased Equipment Capit al Lease Obligation Dec. 31 Interest Expense (10% x $250,000) Capital Lease Obligation ($65,949. 7 – $25,000) Cash 250,000. 00 250,000. 00 25,000. 00 40,949. 37 65,949. 37 21-9 RE21-4 (continued) Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 50,000. 00* 50,000. 00 *The lessee depreciates the asset using the straight-line method over the lease term because there is no transfer of ownership or bargain purchase option, resulting in annual depreciation of $50,000 ($250,000 ? 5). RE21-5 Jan, 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Dec. 31 Interest Expense Accrued Interest on Capital Lease Obligation *($275,000 – $65,949. 37) x 0. 0 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 55,000. 00* 55,000. 00 275,000. 00 65,949. 37 275,000. 00 65,949. 57 20,905. 06* 20,905. 06 *The lessee depreciates the asset using the straight-line method over the lease term because there is no transfer of ownership or bargain purchase option, resulting in annual depreciation of $55,000 ($275,000 ? 5). RE21-6 PV of lease payments = $25,000 x 6. 710081 = PV of single sum of $4,000 = $4,000 x 0. 463193 = Present value of minimum lease payments RE21-7 PV of lease payments = $25,000 x 6. 710081 = PV of single sum of $20,000 = $20,000 x 0. 63193 = Present value of minimum lease payments RE21-8 (a) (b) (c) Sales-type lease Direct financing lease Operating lease $167,752 9,264 $177,016 $167,752 1,853 $169,605 21-10 RE21-9 Jan, 1 Lease Receivable ($65,949. 37 x 5) Equipment Unearned Interest: Leases Dec. 31 Cash Lease Receivable Unearned Interest: Leases (0. 10 x $250,000) Interest Revenue: Leases *($329,746. 85 – $79,746. 85) x 0. 10 RE21-10 Jan, 1 Lease Receivable Sales Revenue Unearned Interest: Leases Cost of Asset Leased Merchandise Inventory (or Equipment Held for Lease) Dec. 31 Cash Lease Receivable Unearned Interest: Leases (0. 0 x $250,000) Interest Revenue: Lease s *($329,746. 85 – $79,746. 85) x 0. 10 329,746. 85 329,746. 85 250,000. 00 79,746. 85 65,949. 37 25,000. 00 65,949. 37 25,000. 00* 250,000. 00 79,746. 85 200,000. 00 200,000. 00 65,949. 37 25,000. 00 65,949. 37 25,000. 00* 21-11 SOLUTIONS TO EXERCISES Note to Instructor: Although students may use their calculators or software to make the various present value calculations, any present value calculations in the following solutions to exercises and problems are based on the factors from the appropriate tables in the TVM Module of the book. E21-1 Criteria 1. . 3. 4. Transfer of ownership at end of lease Bargain purchase option 1. Determination of Lease Classification Met No No No Remarks Reverts to lessor Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value 20% ( 10 year lease life ) 50 year economic life) No PV is $485,098. 79* or 24% of the fair value *PV = (Annual lease payment – Annual executory costs) x PV factor fo r 10 payments at 14% = ($100,000 – $7,000) x 5. 216116 = $485,098. 79 The lease is an operating lease, since none of the above criteria are met. 2. 2010 Dec. 2011 Dec. E21-2 1. . 31 Rent Expense Cash Rent Expense Cash 100,000 100,000 31 100,000 100,000 1. Determination of Lease Classification Criteria Transfer of ownership at end of lease Bargain purchase option Met No No Remarks 21-12 E21-2 (continued) 3. 4. Criteria Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value Met Yes Remarks 100% Yes 100% The lease is a capital lease, since at least one of the Column A criteria is met. 2. Present value = Lease payments x PV factor for 5 payments at 12% (asset and liab) = $83,222. 92 x 3. 604776 = $300,000 (rounded) 3. 1) Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 aColumn Summary of Lease Payments and Interest Expense for the Sax Company (2) Lease Payment Required $ 83,222. 92 83,222. 92 83,222. 92 83,222. 92 83,222. 92 (3) (4) (5) Interest Expense Reduction at 12% on of Lease Balance of Obligation Balancea Obligationb Obligationc $300,000. 00 $36,000. 00 $47,222. 92 252,777. 08 30,333. 25 52,889. 67 199,887. 41 23,986. 49 59,236. 43 140,650. 98 16,878. 12 66,344. 80 74,306. 18 8,916. 74 74,306. 18 -0- 5 at beginning of year x 12%. – Column 3. alance – Column 4. 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Interest Expense (12% x $300,000) Cash 300,000 47,222. 92 36,000. 00 b$83,222. 92 cPrevious 4. 2010 Jan. Dec. 300,000 31 83,222. 92 21-13 E21-2 (continued) 4. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000. 00 ? 5) Capital Lease Obligation Interest Expense (12% x $252,777. 08) Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 60,000 60,000 52,889. 67 30,333. 25 2011 Dec. 31 83,222. 92 31 60,000 60,000 5. Under U. S.GAAP, the Sax Company would classify the lease as an operating lease. The lease does not meet either of the first two criteria. The third criterion is not met since the 3-year lease life is 60% of the economic life of 5 years. The fourth criterion is also not met since the present value of the lease payments of $264,201 ($110,000 x 2. 401831) is 88. 1% of the fair value of $300,000. Therefore, the lease would be an operating lease. Under IFRS, the Sax Company would have to exercise judgment but it is likely that it would classify the lease as a â€Å"finance† lease since two of the indicators would probably be considered to be met.The present value of 88. 1% is probably â€Å"substantially all† of the fair value of the asset. Also, it could be argued that 60% is the †major part† of the economic life of the asset. E21-3 1. Application of Criteria for Determination of Lease Classification from Lessee's Viewpoint Group I Criteria 1. 2. 3. 4. Transfe r of ownership Bargain purchase option Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value* Met No No Yes 100% Remarks Yes 100% = $20,000 x PV factor for 4 payments in advance at 12% = $20,000 x 3. 401831 = $68,036. 62 21-14 *PV of minimum lease paymentsE21-3 (continued) 1. (continued) Since the lease meets at least one of the Column A criteria, it is a capital lease. 2. (1) Summary of Lease Payments and Interest Expense for the Adden Company (2) (3) (4) Balance of Capital Lease Obligation $68,036. 62 48,036. 62a 53,801. 01c 33,801. 01 37,857. 13 17,857. 13 20,000. 00 0 Date January 1, 2010 January 1, 2010 December 31, 2010 January 1, 2011 December 31, 2011 January 1, 2012 December 31, 2012 January 1, 2013 a$68,036. 62 b$48,036. 62 c$48,036. 62 dAdjusted Interest at 12% Annual Lease on Unpaid Payment Obligation Before the initial payment $20,000. 00 0 0 $5,764. 9b 0 20,000. 00 4,056. 12 0 0 20,000. 00 2,142. 87d 0 0 20,000. 00 â₠¬â€œ $20,000 x 12% + $5,764. 39 for $0. 01 rounding error 1 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Interest Expense Accrued Interest on Capital Lease Obligation Insurance Expense Property Tax Expense Cash 68,036. 62 20,000 5,764. 39 5,764. 39 1,500 6,000 3. 2010 Jan. 68,036. 62 20,000 Dec. 31 31 7,500 21-15 E21-3 (continued) 3. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($68,036. 62 ? 4) Accrued Interest on Capital Lease Obligation Capital Lease Obligation CashInterest Expense Accrued Interest on Capital Lease Obligation Insurance Expense Property Tax Expense Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 17,009. 16 17,009. 16 2011 Jan. 1 5,764. 39 14,235. 61 4,056. 12 20,000. 00 Dec. 31 4,056. 12 1,300 5,500 31 6,800 31 17,009. 16 17,009. 16 E21-4 1. Rental receipt = = Fair value of assets PV factor for 8 receipts at 14% $500,000 4. 638864 = $107,785 . 01 21-16 E21-4 (continued) 2. Summary of Lease Payments Received and Interest Revenue Earned by the Rexon Company (1) (2) Annual Lease Payment Received $107,785. 01 107,785. 01 107,785. 01 107,785. 1 107,785. 01 107,785. 01 107,785. 01 107,785. 01 (3) Interest Revenue at 14% on Net Investment $70,000. 00a 64,710. 10 58,679. 61 51,804. 86 43,967. 63 35,033. 20 24,847. 95 13,236. 73f (4) Amount of Net Investment Recovered $37,785. 01b 43,074. 91 49,105. 40 55,980. 15 63,817. 38 72,751. 81 82,937. 06 94,548. 28 (5) Lease Receivable $862,280. 08 754,495. 07c 646,710. 06 538,925. 05 431,140. 04 323,355. 03 215,570. 02 107,785. 01 -0(6) Unearned Interest: Leases $362,280. 08 292,280. 08d 227,569. 98 168,890. 37 117,085. 51 73,117. 88 38,084. 68 13,236. 73 -0(7) Net Investment $500,000. 00 462,214. 99e 419,140. 08 370,034. 8 314,054. 53 250,237. 15 177,485. 34 94,548. 28 -0- Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 Dec ember 31, 2015 December 31, 2016 December 31, 2017 a$500,000 21-17 x 14% – $70,000. 00 – $107,785. 01 – $70,000. 00 b$107,785. 01 c$862,280. 08 d$362,280. 08 e$500,000 fAdjusted – $37,785. 01 for $0. 03 rounding error 21-17 E21-4 (continued) 3. 2010 Jan. 1 Lease Receivable Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 862,280. 8 500,000. 00 362,280. 08 107,785. 01 70,000 Dec. 31 31 107,785. 01 70,000 2011 Dec. 31 31 107,785. 01 64,710. 10 107,785. 01 64,710. 10 E21-5 Proof that the yield is 1%: PVn=48, i=1% is not given in text; it is 37. 973959; thus PV of lease payments received = Monthly lease payment x PV factor for 48 receipts at 1% = $1,600 x 37. 973959 = $60,758 (This is not required for the problem) 2010 Jan. 2 Lease Receivable Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Int erest Revenue: Leases [1% x ($76,800 – $16,042)], (rounded) 76,800 0,758 16,042 1,600 31 1,600 31 608 608 21-18 E21-6 1. Annual lease payment = Cost of the equipmet PV factor for 5 years in advance at 14% = $30,000 3. 913712 = $7,665. 36 Summary Table (1) Lessee Company (2) Lease Payment Required Lease Rental Collected (3) Interest at 14% on Unpaid Obligation Interest at 14% on Net Investment (4) Balance of Lease Obligation Net Investmenta Lessor Company Date January 1, 2010 January 1, 2010 $7,665. 36 December 31, 2010 0 January 1, 2011 7,665. 36 December 31, 2011 0 January 1, 2012 7,665. 36 December 31, 2012 0 January 1, 2013 7,665. 6 December 31, 2013 0 January 1, 2014 7,665. 36 aPrevious balance – Column 2 + Column 3 b$22,334. 64 cAdjusted 0 $3,126. 85b 0 2,491. 46 0 1,767. 11 0 941. 38c 0 $30,000. 00 22,334. 64 25,461. 49 17,796. 13 20,287. 59 12,622. 23 14,389. 34 6,723. 98 7,665. 36 0 x 14% for $0. 02 rounding error 21-19 E21-6 (continued) Date 01/01/10 12/31/10 12/31/11 12/31/12 12/31/13 1$7,665. 36 Lease Receivable $38,326. 801 30,661. 44 22,996. 08 15,330. 72 7,665. 36 x5 – $30,000. 00 – $3,126. 85 – Unearned Net = Interest: Leases Investment $8,326. 802 5,199. 953 2,708. 49 941. 38 0 $30,000. 00 25,461. 9 20,287. 59 14,389. 34 7,665. 36 2$38,326. 80 3$8,326. 80 2. Lessor Leasing Company: 2010 Jan. 1 Lease Receivable ($7,665. 36 x 5) Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 38,326. 80 30,000. 00 8,326. 80 7,665. 36 3,126. 85 1 Dec. 31 7,665. 36 3,126. 85 Lessee Company: 2010 Jan. 1 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash 30,000 7,665. 36 30,000 7,665. 36 21-20 E21-6 (continued) 2. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($30,000 ? ) Interest Expense Accrued Interest on Capital Lease Obligation Executory Costs (Expenses) Cash 6,000 6,000 3,126. 85 3,126. 85 500 500 31 31 E21-7 1. Selling price (fair value and the net investment) = $50,000 (PVn = 4, i = 12%) = $50,000 x 3. 037349 = $151,867. 45 2. Summary of lease receipts and interest revenue: Information needed to prepare table: Gross investment = Annual lease payment received x Number of payments = $50,000 x 4 = $200,000 Initial PV of the investment: PV of lease payments (see 1) = $151,867. 45 Unearned interest revenue = Gross investment – Initial PV of investment = $200,000 – $151,867. 5 = $48,132. 55 = $151,867. 45 = $130,000. 00 Sales price = PV of minimum lease payments Cost of asset leased = Cost of equipment 21-21 E21-7 (continued) 2. (continued) Gross profit = Sales price – Cost of asset leased = $151,867. 45 – $130,000. 00 = $21,867. 45 (Table follows Requirement 3) 3. 2010 Jan. 1 Lease Receivable Sales Unearned Interest: Leases Cost of Asset Leased Equipment Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Recei vable Unearned Interest: Leases Interest Revenue: Leases 200,000. 00 151,867. 45 48,132. 55 130,000. 00 50,000 18,224. 09 1 Dec. 31 31 2011 Dec. 30,000. 00 50,000 18,224. 09 31 31 50,000 14,410. 98 50,000 14,410. 98 21-22 E21-7 (continued) 2. Summary of Lease Payments Received and Interest Revenue Earned by the Berne Company (1) (2) Annual Lease Payment Received $50,000 50,000 50,000 50,000 (3) Interest Revenue at 12% on Net Investment $18,224. 09a 14,410. 98 10,140. 30 5,357. 18f (4) Amount of Net Investment Recovered $31,775. 91b 35,589. 02 39,859. 70 44,642. 82 (5) Lease Receivable $200,000 150,000c 100,000 50,000 -0(6) Unearned Interest: Leases $48,132. 55 29,908. 46d 15,497. 48 5,357. 18 -0(7) Net Investment $151,867. 45 120,091. 54e 84,502. 52 44,642. 2 -0- Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 a$151,867. 45 b$50,000 21-23 x 0. 12 – $18,224. 09 – $50,000 – $18,224. 09 – $31,775. 91 c$200,000 d$4 8,132. 55 e$151,867. 45 fAdjusted for $0. 04 rounding error 21-23 E21-8 1. Selling price (fair value) = $100,000 (PV in advance) n = 5, i = 14% = $100,000 (3. 913712) = $391,371. 20 2. Summary of lease payments received and interest revenue: Information needed to prepare table: Gross investment 20-24 = = = (Annual lease payment received x Number of payments) + Unguaranteed residual value ($100,000 x 5) + $20,000 $520,000Initial present value of the investment: PV of lease payments (see part 1) PV of unguaranteed residual value: $20,000 x PV of a single sum for 5 years at 14%: $20,000 x 0. 519369 Total initial PV (this is also the net investment) Unearned interest: leases $391,371. 20 10,387. 38 $401,758. 58 = Gross investment – Initial PV of the investment = $520,000. 00 – $401,758. 58 = $118,241. 42 Sales price = = Present value of lease payments $391,371. 20 (see part 1) = Cost of asset – PV of the unguaranteed residual value = $313,000. 00 – $10,387. 3 8 = $302,612. 62 Cost of asset leased 21-24 E21-8 (continued) 2. continued) Gross profit = = = Sales price – Cost of asset leased $391,371. 20 – $302,612. 62 $ 88,758. 58 Summary of Lease Payments Received and Interest Revenue Earned by the Edom Company (1) (2) Annual Lease Payments Received $100,000. 00 100,000. 00 100,000. 00 100,000. 00 100,000. 00 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $520,000. 00a 420,000. 00 320,000. 00 220,000. 00 120,000. 00 20,000. 00 (5) Unearned Interest: Leases $118,241. 42b 75,995. 22 41,834. 55 16,891. 39 2,456. 18 0 (6) Net Investment $401,758. 58 301,758. 58 344,004. 78d 244,004. 78 278,165. 45 178,165. 45 203,108. 61 103,108. 61 117,543. 2 17,543. 82 20,000. 00f Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 Jan. 1, 2012 Dec. 31, 2012 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2014 Dec. 31, 2014 a($100,000 b$520,000 $42,246. 20c 34,160. 67 24,943. 16 14,435. 21 2,456. 18e x 5) + $20,000 x 1 4% + $42,246. 20, or $420,000 – $75,995. 22 residual value Lease Receivable Cost of Asset Leased Sales Equipment (or Inventory) Unearned Interest: Leases 520,000. 00 302,612. 62 – $401,758. 58 c$301,758. 58 d$301,758. 58 eAdjusted for $0. 05 rounding error fUnguaranteed 3. 2010 Jan. 1 391,371. 20 313,000. 00 118,241. 42 21-25 E21-8 (continued) 3. (continued) Jan. Dec. 011 Jan. Dec. E21-9 Summary Table for First 3 Months (1) Bullard Company: Month Anson Company: Month Beginning of 1 Beginning of 1 End of 1 Beginning of 2 End of 2 Beginning of 3 End of 3 (2) Lease Payment Required (3) Interest Expense (4) Balance of Lease Obligation 1 31 Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 100,000 42,246. 20 100,000 42,246. 20 1 31 100,000 34,160. 67 100,000 34,160. 67 Lease Receipt $2,000 0 2,000 0 2,000 0 Interest Revenue 0 $588b 0 574 0 560 Net Investmenta $60,817 58,817 59,40 5c 57,405 57,979 55,979 56,539 1-26 E21-9 (continued) Receivable $70,0001 68,000 66,000 64,000 1($2,000 2$58,817 b1% aLease – Unearned = Interest: Leases $9,183 8,595 8,021 7,461 Net Investment $60,8172 59,405 57,979 56,539 x 35) + $2,000 + $588 Lease Receivable Sales ($58,817 + $2,000) Unearned Interest: Leases ($72,000 – $60,817) Cost of Asset Leased Merchandise Inventory 72,000 60,817 11,183 50,000 2,000 588 2,000 574 2,000 560 50,000 2,000 588 2,000 574 2,000 560 x $58,817 c$58,817 1. At inception Initial receipt At end of 1st month Cash Lease Receivable Unearned Interest: Leases Interest Revenue: LeasesSecond Cash Installment Lease Receivable At end of Unearned Interest: Leases 2nd month Interest Revenue: Leases Third Cash installment Lease Receivable At end of 3rd month Unearned Interest: Leases Interest Revenue: Leases 21-27 E21-9 (continued) 2. Computation of Lessee's Obligation Using the Implicit Interest Rate PV of lease payments = $ 2,000 + PV of remaining 3 5 payments of $2,000 each at 1% = $ 2,000 + $58,817 = $60,817* *Note: By definition, the present value of the lease payments equals the initial payment plus the present value of the remaining lease payments, since the initial payment is at the beginning of the period.At inception Initial payment At end of 1st month Leased Equipment Capital Leases Obligation Capital Lease Obligation Cash Interest Expense Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($60,817 ? 36) Second Accrued Interest on installment Capital Lease Obligation Capital Lease Obligation Cash At end of Interest Expense 2nd month Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 60,817 2,000 588 588 1,689 1,689 588 1,412 574 574 1,689 1,689 60,817 2,000 ,000 21-28 E21-9 (continued) 2. (continued) Third Accrued Interest on installment Capital Lease Obligation Capital Lease Obligation Cash At end of 3rd month Interest Expense Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment E21-10 Computation of the effect on income before income taxes using the sales-type lease method Sales = PV of lease payments receivable = (PV factor for 8 payments in advance at 12%) x $60,000 = 5. 563757 x $60,000 = $333,825 Cost of asset leased = = Cost of the property $275,000 574 1,426 560 560 1,689 1,689 ,000 21-29 E21-10 (continued) Interest revenue: leases = 12% x [(Lease receivable – Initial payment) Unearned interest: leases] = 12% x [($60,000 x 8) – $60,000) – (Lease rec. – Sales)] = 12% x ($420,000 – $146,175) = $32,859 Incremental effect on income before income taxes Sales Less: Cost of asset leased Gross margin Add: Interest revenue Incremental revenue recognized $333,825 (275,000) $ 58,825 32,859 $ 91,684 Computation of the effect on income before in come taxes using the operating lease method Rental revenue Depreciation expense = $60,000. 0 = = Cost – Residual Value Economic life $275,000 – $0 8 = $34,375 Incremental effect on income before income taxes Rental revenue $60,000 Less: Depreciation expense (34,375) $25,625 Effect on income before income taxes Sales-type lease income Operating lease income Income before income taxes $91,684 (25,625) $66,059 understated 21-30 E21-11 1. Computation of Income Before Income Taxes Derived by Reuben Company for Year Ended December 31, 2010 Rental revenue Maintenance expense Depreciation expense Income before income taxes *10/12 x $180,000 #$900,000 150,000* (20,000) (90,000)# $ 40,000 ? 10 (It should be depreciated for a full year) 2. Rent expense = 10/12 x $180,000 = $150,000 E21-12 1. Application of Criteria for Determination of Lease Classification from Lessor's Viewpoint Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met Yes No Y es 80% ( Remarks Lease term is 75% or more of economic life 4 year lease life ) 5 year economic life 4. Present value of lease payments is 90% or more of fair value Column B Criteria 1. Collectibility assured 2.No uncertainties Yes Present value is $8,400, or 100% of the fair value Yes Yes Since the lease meets at least one of the Column A criteria and both of the Column B criteria, and there is no dealer's profit (PV of lease payments – Cost of car = $8,400 – $8,400 = $0), the transaction should be classified as a direct financing lease. 21-31 E21-12 (continued) 2. Summary of lease payments received and interest revenue: Computation of amount of lease receipts: Yearly lease receipt = Cost of the car PV factor for 4 payments at 10% $8,400 3. 169865 = $2,649. 96 (Table follows Requirement 3) 3. 2010 Jan. 1 1 Automobile Held for Lease Cash Lease Receivable Automobile Held for Lease Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue : Leases (from table) Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases (from table) 8,400. 00 10,599. 84 8,400. 00 8,400. 00 2,199. 84 2,649. 96 Dec. 31 31 2,649. 96 840. 00 840. 00 2,649. 96 659. 00 659. 00 2011 Dec. 31 31 2,649. 96 21-32 E21-12 (continued) 2.Summary of Lease Payments Received and Interest Revenue Earned by the Ravis Rent-A-Car Company (by Interest Method) (1) (2) Annual Lease Payments Received $2,649. 96 2,649. 96 2,649. 96 2,649. 96 (3) Interest Revenue at 10% on Net Investment $840. 00a 659. 00 459. 90 240. 94f (4) Amount of Net Investment Recovered $1,809. 96b 1,990. 96 2,190. 05 2,409. 02 (5) Lease Receivable $10,599. 84 7,949. 88c 5,299. 92 2,649. 96 -0(6) Unearned Interest: Leases $2,199. 84 1,359. 84d 700. 84 240. 94 -0(7) Net Investment $8,400. 00 6,590. 04e 4,599. 08 2,409. 02Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 a$8,400. 00 b$2,649. 96 21-33 x 10% – $840. 00 – $2 ,649. 96 – $840. 00 – $1,809. 96 c$10,599. 84 d$2,199. 84 e$8,400. 00 fAdjusted for $0. 04 rounding error 21-33 E21-13 1. Present value of lease payments = $10,000 x PV factor for 6 payments at 10% = $10,000 x 4. 355261 = $43,552 (rounded down for simplicity) = $50,000 fair value of the machine – $43,552 = $6,448 = $6,448 x FV of 1 factor for 6 periods at 10% = $6,448 x 1. 771561 = $11,421 (rounded) Present value of residual valueResidual value at the end of the lease term 2. 20-34 Since the first three criteria are not met, the classification of the lease depends on the fourth criterion. A guaranteed residual value is not included in the minimum lease payments. Therefore, Baker Company would classify the lease as a capital lease because the fourth criterion is met as follows: Present value of minimum lease payments = = $43,552 + $6,448 $50,000, or 100% of the fair value of the machine 3. Since the first three criteria are not met, the classification of the leas e depends on the fourth criterion.An unguaranteed residual value is included in the minimum lease payments. Therefore, Baker Company would classify the lease as an operating lease because the fourth criterion is not met as follows: Present value of minimum lease payments = $43,552, or 87. 1% of the fair value of the machine E21-14 1. 2010 Jan. 1 Cash Land Unearned Profit on Sales-Leaseback Leased Land Capital Lease Obligation Insurance and Property Tax Expense Cash 31 Capital Lease Obligation Interest Expense – Leases (14% x $2,500,000) Cash 21-34 2,500,000 2,000,000 500,000 2,500,000 12,000 1 During the year Dec. ,500,000 12,000 7,007 350,000 357,007 E21-14 (continued) 2. The $500,000 unearned profit is amortized by the straight-line method over the 25 year term of the lease. The yearly entry is 2010 Dec. 31 Unearned Profit on Sales – Leaseback Realized Profit on Sales – Leaseback 20,000 20,000 21-35 SOLUTIONS TO PROBLEMS P21-1 1. Application of Criteria for De termination of Lease Classification Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met No No No Remarks Lease term is 75% or more of economic life 5 year lease life 50% ( ) 10 year economic lifePV of $268,685. 58* is 88% of fair value 4. Present value of lease payments is 90% or more of fair value *PV No = (Yearly lease payments – Executory costs) x PV factor for 5 payments in advance at 12% = ($70,000 – $3,450) x 4. 037349 = $66,550 x 4. 037349 = $268,685. 58 This lease is an operating lease for both the Alice Company (lessee) and the Superior Equipment Company (lessor). Reasons: None of the Column A criteria are met. 2. Alice Company (lessee): 2010 Jan. 1 Rent Expense Cash 70,000 70,000 21-36 P21-1 (continued) 2. (continued) Superior Equipment Company (lessor): 2011 Jan.During the year Dec. 31 1 Cash Rental Revenue Property Tax Expense Maintenance Expense Insurance Expense Cash 70,000 650 1,600 1,200 70,000 3,450 Depreciation Expense: Equipment 49,500 Accumulated Depreciation: Equipment [($500,000 – $5,000) ? 10] Application of Criteria for Determination of Lease Classification 49,500 3. Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met No No No Remarks Lease term is 75% or more of economic life 5 year lease life 50% ( ) 10 year economic life PV of $305,000* (rounded) 100% of fair value . Present value of lease payments is 90% or more of fair value *PV Yes = [(Yearly lease payments – Executory costs) x PV factor for 5 payments in advance at 12%] + PV of guaranteed residual value = = = = [($70,000 – $3,450) x 4. 037349] + ($64,000 x 0. 567427) ($66,550 x 4. 037349) + $36,315. 33 $268,685. 57 + $36,315. 33 $305,000 (rounded) This lease is a capital lease for both the Alice Company (lessee) and the Superior Equipment Company (lessor). Reasons: †¢ The lessee would classify the lease as a capital lease because one of the Column A criteria i s met. The lessor would classify the lease as a direct financing lease because (a) one of the Column A criteria is met, (b) both of the Column B criteria are met, and (c) there is no profit at the inception of the lease (fair value = present value of the minimum lease payments). 21-37 P21-1 (continued) 3. (continued) Alice Company (lessee): 2010 Jan. 1 1 Leased Equipment Capital Lease Obligation Executory Costs Expense Capital Lease Obligation Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment [($305,000 – $64,000) ? ] Interest Expense [12% x ($305,000 – $66,550)] Accrued Interest on Capital Lease Obligation Executory Costs Expense Accrued Interest on Capital Lease Obligation Capital Lease Obligation Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment Interest Expense [12% x ($305,000 – $66,550 – $37,936)] Accrued Interest on Capital Obligation 305,000 3,450 66,550 305,000 70,000 Dec. 31 48,200 48,200 28,614 28,614 3,450 28,614 37,936 31 2011 Jan. 1 70,000 Dec. 31 48,200 48,200 24,061. 68 24,061. 68 31 21-38 P21-1 (continued) 3. continued) 2014 Dec. 31 Capital Lease Obligation Cash 64,000 64,000 Superior Equipment Company (lessor): 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($66,550 x 5 + $64,000) Equipment Leased to Others Unearned Interest: Leases Cash Lease Receivable Property Tax Expense Maintenance Expense Insurance Expense Cash Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Property Tax Expense Maintenance Expense Insurance Expense Cash Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable 305,000 305,000 396,750 05,000 91,750 66,550 1 During The Year Dec. 31 2011 Jan. During The Year Dec. 31 2014 Jan. 66,550 650 1,600 1,200 28,614 3,450 28,614 1 66,550 650 1,600 1,200 24,061. 68 66,550 3,450 24,061. 68 1 64,000 64,000 21-39 P21-2 1. Application of Criteria for Determination of Lease Classific ation Column A Criteria 1. 2. 3. 4. Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value Met No Yes Yes 100% Present value is $185,090. 68 or 100% of fair value Remarks YesThis is a sales-type lease for Ballieu Company, since one or more of the Column A criteria are met, both of the Column B criteria are met, and there is a dealer's profit (PV of lease payments – Cost of asset = $185,090. 68 – $150,000 = $35,090. 68) 2. (1) Two-Year Table of Lease Payment Receipts and Interest Revenue Recognition (2) Annual Lease Payments Received $35,000. 00 35,000. 00 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $280,000. 00a 245,000. 00 210,000. 00 (5) Unearned Interest: Leases $94,909. 32b 73,896. 62 (6) Net Investment $185,090. 8 150,090. 68 171,103. 38d 136,103. 38 155,157. 85 Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 a$35,000 $21,012. 70c 19,054. 47 x8 – $185,090. 68 x 14% + $21,012. 70 b$280,000 c$150,090. 68 d$150,090. 68 21-40 P21-2 (continued) 2. (continued) 2010 Jan. 1 Lease Receivable ($35,000 x 8) Sales Unearned Interest: Leases ($280,000 – $185,090. 68) Cost of Asset Leased Specialty Equipment (Inventory) Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 280,000. 0 185,090. 68 94,909. 32 1 1 Dec. 2011 Jan. Dec. 3. 31 150,000. 00 35,000 21,012. 70 150,000. 00 35,000 21,012. 70 1 31 35,000 19,054. 47 35,000 19,054. 47 The lessor must disclose: a. A general description of the leasing arrangements b. (1) The components of the net investment at the date of each balance sheet presented: (a) The future lease payments to be received (b) The unearned interest revenue: leases (2) Future lease payments to be received for each of the 5 succeeding fiscal years as of the date of the latest ba lance sheet presented P21-3 1.Present value = Lease payments x PV factor for 5 payments at 12% (asset and liab) = $83,222. 92 x 3. 604776 = $300,000 (rounded) 21-41 P21-3 (continued) 2. (1) Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 a$300,000 Summary Table of Lease Payments and Interest Expense for Timmer Company (2) Lease Payment Required $83,222. 92 83,222. 92 83,222. 92 83,222. 92 83,222. 92 (3) Interest Expense at 12% on Obligation Balancea $36,000. 00a 30,333. 25 23,986. 49 16,878. 12 8,916. 74d (4) Reduction of Lease Obligation $47,222. 2b 52,889. 67 59,236. 43 66,344. 80 74,306. 18 (5) Balance of Lease Obligation $300,000. 00 252,777. 08c 199,887. 41 140,650. 98 74,306. 18 -0- x 12% – $36,000. 00 – $47,222. 92 b$83,222. 92 c$300,000. 00 3. 2010 Jan. Dec. 1 31 Leased Equipment Capital Lease Obligation Capital Lease Obligation Interest Expense Cash Insurance Expense Property Tax Expense Cash Depre ciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000. 00 ? 5) Capital Lease Obligation Interest Expense Cash Insurance Expense Property Tax Expense Cash 21-42 300,000 47,222. 2 36,000. 00 3,760 5,440 300,000 83,222. 92 31 9,200 31 60,000 60,000 52,889. 67 30,333. 25 3,100 5,330 2011 Dec. 31 83,222. 92 31 8,430 P21-3 (continued) 3. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment TIMMER COMPANY Balance Sheet (Partial) December 31, 2010 Assets Property, Plant, and Equipment Leased property less accumulated amortization $240,000. 00 (Note X) a$83,222. 92 60,000 60,000 4. Liabilities Current Capital lease obligation Noncurrent Capital lease obligation (Note X) $ 74,306. 17a,c $178,470. 1b,c x 0. 892857 – $74,306. 17 b$252,777. 08 cThese amounts computed by the â€Å"change in present value approach† are $52,889. 67 and $199,887. 41, respectively Under U. S. GAAP, the Timmer Company would classify the lease as an operating lease. The lease does not meet either of the first two criteria. The third criterion is not met since the 3-year lease life is 60% of the economic life of 5 years. The fourth criterion is also not met since the present value of the lease payments of $269,507 ($120,000 x 2. 245890) is 89. 8% of the fair value of $300,000.Therefore, the lease would be an operating lease. Under IFRS, the Timmer Company would have to exercise judgment but it is likely that it would classify the lease as a â€Å"finance† lease since two of the indicators would probably be considered to be met. The present value of 89. 8% is probably â€Å"substantially all† of the fair value of the asset. Also, it could be argued that 60% is the â€Å"major part† of the economic life of the asset. 5. 21-43 P21-4 1. Summary Table of Lease Payments Received and Interest Revenue Earned by the Calden Company (1) (2) Lease Payment Received $65,000. 0 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 (3) Interest Revenue at 15% on Net Investment $46,203. 16c 43,383. 63 40,141. 17 36,412. 35 32,124. 20 27,192. 83 21,521. 76 14,999. 87h (4) Reduction of Net Investment $18,796. 84d 21,616. 37 24,858. 83 28,587. 65 32,875. 80 37,807. 17 43,478. 24 50,000. 13 (5) Lease Receivable $570,000a 505,000e 440,000 375,000 310,000 245,000 180,000 115,000 50,000 (6) Unearned Interest: Leases $261,978. 97 215,775. 81f 172,392. 18 132,251. 01 95,838. 66 63,714. 46 36,521. 63 14,999. 7 -0(7) Net Investment $308,021. 03b 289,224. 19g 267,607. 82 242,748. 99 214,161. 34 181,285. 54 143,478. 37 100,000. 13 50,000. 00i Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 a$570,000 21-44 is the undiscounted value of the lease payments plus the unguaranteed residual value is the present value of the lease payments plus the present valu e of the unguaranteed residual x 15% b$308,021. 03 value c$308,021. 03 d$65,000. 00 e$570,000 $46,203. 16 – $46,203. 16 – $18,796. 84 residual value – $65,000 f$261,978. 97 g$308,021. 03 hAdjusted for $0. 15 rounding error iUnguaranteed 21-44 P21-4 (continued) 2. Criteria for direct financing lease: Application of Criteria for Determination of Lease Classification Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Lease term is 75% or more of eonomic life 4. Present value of lease payments is 90% or more of fair value *PV of minimum lease payments Met No No Yes 89% ( 8 year lease life ) 9 year economic life Remarks 0-45 Yes PV is 94. 7% of the fair value of the leased asset* = $65,000 x PV factor for 8 payments at 15% = $65,000 x 4. 487322 = $291,675. 93 Column B Criteria 1. Collectibility assured 2. No uncertainties Met Yes Yes Remarks The lease is properly classified as a direct financing lease because at least one of the Column A criteria is met, both of the Column B criteria are met, and there is no dealer's profit. 3. 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($520,000 + $50,000) Equipment Leased to Others Unearned Interest: Leases 308,021. 3 308,021. 03 570,000 308,021. 03 261,978. 97 21-45 P21-4 (continued) 3. (continued) Dec. 31 31 2011 Dec. Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases CALDER COMPANY Balance Sheet (Partial) Assets Current Assets Net investment in direct financing leases (Note X) Noncurrent Assets Net investment in direct financing leases (Note X) a$65,000 65,000 46,203. 16 5,000 46,203. 16 31 31 65,000 43,383. 63 65,000 43,383. 63 2012 Dec. 31 31 65,000 40,141. 17 65,000 40,141. 17 4. December 31, 2011 2010 $ 56,521. 73a,d $ 56,521. 73a,c $211,086. 09b,d $232,702. 46b,c x 0. 869565 $289 ,224. 19 – $56,521. 73; 12/31/11: $267,607. 82 – $56,521. 73 b12/31/10: cThese amounts computed by the â€Å"change in present value approach† are $21,616. 37 and $267,607. 82, respectively amounts computed by the â€Å"change in present value approach† are $24,858. 83 and $242,748. 99, respectively dThese 21-46 P21-5 1. a) Landlord Company computation of annual rental amount Annual rental amount = = Cost of equipment PV factor for 6 receipts in advance at 14% $300,000 4. 433081 = $67,673. 02 (b) Tenant Company computation of the present value of the lease rights: To find the present value of the lease rights, Tenant Company would multiply the annual rental payment ($67,673. 02) by the PV factor for 6 periods paid in advance at i%. The percentage i would be the lower of 14% or Tenant Company's incremental borrowing rate. This incremental borrowing rate is the additional information needed.Summary Table of Lease Payments Received and Interest Revenue Recog nition for the Landlord Company (1) (2) Annual Lease Payments Received $67,673. 02 67,673. 02 67,673. 02 67,673. 02 67,673. 02 67,673. 02 2. Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 Jan. 1, 2012 Dec. 31, 2012 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2014 Dec. 31, 2014 Jan. 1, 2015 a$67,673. 02 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $406,038. 12a 338,365. 10 270,692. 08 203,019. 06 135,346. 04 67,673. 02 0 (5) Unearned Interest: Leases $106,038. 12b 73,512. 4 45,907. 18 23,911. 52 8,310. 69 0 (6) Net Investment $300,000. 00 232,326. 98 264,852. 76d 197,179. 74 224,784. 90 157,111. 88 179,107. 54 111,434. 52 127,035. 35 59,362. 33 67,673. 02 0 $32,525. 78c 27,605. 16 21,995. 66 15,600. 83 8,310. 69e x6 – $300,000. 00 x 14% d$232,326. 98 eAdjusted + $32,525. 78 b$406,038. 12 c$232,326. 98 for $0. 04 rounding error This table would also be suitable for Tenant Company if Tenant's incremental borrowing rate is ? 14%. 21-47 P21-5 (continued) 3. Journal entries: Tenant Company (lessee): 2010 Jan. 1 1 During the year Dec. 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Insurance Expense Property Tax Expense Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000 ? 6) Interest Expense Accrued Interest on Capital Lease Obligation Accrued Interest on Capital Lease Obligation Capital Lease Obligation Cash Insurance Expense Property Tax Expense Cash 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment Interest Expense Accrued Interest on Capital Lease Obligation 300,000 67,673. 2 700 800 300,000 67,673. 02 1,500 50,000 50,000 32,525. 78 32,525. 78 31 2011 Jan. 1 32,525. 78 35,147. 24 600 750 67,673. 02 During the year Dec. 1,350 50,000 50,000 27,605. 16 27,605. 16 31 21-48 P21-5 (continued) 3. (continued) Landlord Company (lessor): 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($67,673. 02 x 6) Equipm ent Leased to Others Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 300,000. 0 406,038. 12 300,000. 00 300,000. 00 106,038. 12 67,673. 02 32,525. 78 1 Dec. 2011 Jan. Dec. 4. 31 67,673. 02 32,525. 78 1 31 67,673. 02 27,605. 16 67,673. 02 27,605. 16 Income statements and balance sheets: Tenant Company Disclosure (Lessee) Comparative Balance Sheets (Partial) December 31 Assets 2011 2010 Liabilities 2011 2010 Leased equipment less accumulated amortization (Notes 1 and 2) $200,000. 00 $250,000. 00 Current Capital lease obligation $ 67,673. 02 Noncurrent Capital lease obligation 157,111. 88 (Notes 1 and 2) $ 67,673. 02 197,179. 74

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Lubricant industry is a very competitive industry because many companies around the world have created their own private label and competition between the well-known product in the market such as Shell, Castrol, Royal Purple etc. The availability of a vast range of products at competitive prices has been a major factor in attracting customers to lubricants market. As a result, many manufacturers of lubricants, including big corporations, have been aggressively pursuing international and Asia markets. Moreover, the market share of the industry is monopolized by big corporations, such as, Petronas, Shell and Caltex. The big corporations and manufacturers have the advantages many small companies lack of, such as, expensive advertisement, sponsorship and expert management team. For the small businesses to tap into market that has been monopolized by big corporations is very difficult for companies. Psychologically, consumers always and only use products that are recommended by peers or they have been using it for a while (2). Because of this reason, products that are very new will be hard to market their brands into the market effectively. The user confidence is very low because weak brand image, uncertain quality and doubtful suitability. Besides that, counterfeiting has become the major issue for various types of products in the market. As technology become more sophisticated and cheap, many counterfeiters easily copied products that are well-known and established. This also becomes a problem by Moto7 Distribution S/B to overcome as it has to compete with the original products and counterfeit products, hence making the market shares become much smaller.

Apush Era of Jackson Essay

Apush Era of Jackson Essay Apush: Era of Jackson Essay 1828 Election: Jackson defeats John Quincy Adams despite Jackson’s large speculation and scandals. Jackson’s appeal to the poor non-aristocratic citizens gained him his sweeping victory. Martin Van Buren: Jackson’s Secretary of State first term and Vice President Jackson’s second term who also hopes to be Jackson’s successor and has a tense rivalry with Calhoun. John C. Calhoun: Vice President in Jackson’s first term and opposes Van Buren and hopes to win him over in the next election. From South Carolina, and determined to preserve southern interests and ideals such as slavery and anti-industrialism. Peggy Eaton Affair: Jackson dislikes John Eaton’s wife as she married Senator Eaton shortly before his appointment to Secretary of War. Much hard feeling eventually caused her to withdraw from Washington. Maysville Road Bill 1830: The government is authorized to buy stock in road construction in Maysville, Kentucky to Lexington. How ever Jackson vetoes the bill on the grounds that it is unconstitutional. Many see this as an abuse of power. National Road: Jackson supports and shows limited federal support for transportation movements that are not at a national level. The Tariff of 1828: â€Å"The tariff of abominations† largely opposed to the new tariff as it makes it harder for Britain, France, and other European countries to buy southern, especially South Carolina. South Carolina Exposition and Protest: by John Calhoun opposing Jackson’s new tariff of 1828. Nullification: Calhoun’s theory that states can repeal a federal law and declare it unconstitutional. According to Calhoun, the government could decide to void the law or propose an amendment. Tariffs for protection were considered unconstitutional. Webster-Hayne Debate: Hayne argued that the federal government cannot limit state rights, while Daniel Webster claimed that a country cannot by unified unless all laws are equally enfor ced. Tariff of 1832: Jackson calms nullifiers in South Carolina by reducing tariffs on goods with less competition. South Carolina Ordinance: South Carolinians worried that the tariffs could end slavery and repudiated the Acts of 1828 and 1832. Force Bill: Jackson’s use of the army to enforce the state’s agreement to federal law after he attempted asking congress to lower the tariffs. Eventually both sides agreed to significantly reducing the tariffs by 1842. 1830 Indian Removal Act: Indians are given federal land in the west in exchange for their territories mainly in the Midwest and southeast regions. Black Hawk War 1832: War erupted in Wisconsin/Illinois territory when the Illinois militia forcefully and brutally, killing many, pushed the Sauk and Fox northwest. 1835 Seminole War: The Seminoles and Cherokees in the south fought a guerilla war against the federal removal policy. Most eventually moved west. The Trail of Tears: used by 17,000 Cherokees, this 800 -mile trail with cruelty of soldiers and private owners. 4,000 died on the brutal journey and only 8,000 completed the trip to Oklahoma. Cherokee Nation v. Georgia: The supreme court rules that it does not have the jurisdiction to determine who owns the land of northern Georgia containing newly discovered gold deposits. The judge did say that the

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Latin Numbers - The Ordinal or Ordered Numbers Latin ordinal numbers are ordered numbers: as in other Indo-European languages, they are adjectives which refer to the order of a set of objects in a list. English ordinals are words like first, second, third, expressed in Latin primus, secundus, tertius. In contrast, cardinal numbers are nouns which tell you how many objects there are. Cardinal numbers in Latin are unus, duo, tres; English versions of those are one, two, three. Variations The ordinal numbers in Latin are declined like first and second declension adjectives. There are some oddities to note: Some versions of the numbers have a variable presence of n before s and both spellings are acceptablefor 21st in the feminine, you might see una et vicesima twenty-first or the contracted form unetvicesima. For other compounds, as in English, different texts use different versions. You may see the larger number before the smaller with no conjoining ​et or you might see the smaller before with larger separated by the conjunction et. Thus, you may see either vicesimus quartus (twenty-fourth, with the et) or quartus et vicesimus (four and twenty, with the et). For 28th, the Latin ordinal number is based on the idea of taking 2 from 30 or duodetricensimus, just as the duo de 2 from precedes 20th in the ordinal number for 18th: duodevicesimus. Primus Through Decimus Below are listed the basic ordinal numbers in Latin with the Roman numeral corresponding to their  value and their English equivalent. Roman Numeral | Ordinal | English TranslationI. | primus (-a, -um) | firstII. | secundus, alter | secondIII. | tertius | thirdIV. | quartus | fourthV. | quintus | fifthVI. | sextus | sixthVII. | septimus | seventhVIII. | octavus | eighthIX. | nonus | ninthX. | decimus | tenth Undescimus Through Nonus Decimus Variations are present in the Latin ordinals for tenth through nineteenth. If that seems strange, recall that English ordinals for 11th (eleventh) and 12th (twelfth) are formed differently than higher ones (thirteenth through nineteenth). Roman Numeral | Ordinal | English TranslationXI. | undecimus | eleventhXII. | duodecimus | twelfthXIII. | tertius decimus or decimus et tertius | thirteenthXIV. | quartus decimus or decimus et quartus | fourteenthXV. | quintus decimus or decimus et quintus | fifteenthXVI. | sextus decimus or decimus et sextus |  sixteenthXVII. | septimus decimus or decimus et septimus | seventeenthXVIII. | duodevice(n)simus, also octavus decimus | eighteenthXIX. | undevice(n)simus, also nonus decimus | nineteenth Ac Deinceps Exortis et Superiora Loca Ordinals higher than 20th follow the same patterns and variations as those seen in first through nineteenth. Roman Numeral | Ordinal | English TranslationXX. | vice(n)simus | twentiethXXI. | unus et vice(n)simus, also vicesimus primus | twenty-firstXXII. | alter et vice(n)simus or vicesimus secundus |  twenty-secondXXX. | trice(n)simus or trigesimus | thirtiethXL. | quadrage(n)simus | fortiethL. | quinquage(n)simus | fiftiethLX. | sexage(n)simus | sixtiethLXX. | septuage(n)simus | seventiethLXXX. | octoge(n)simus | eightiethXC. | nonage(n)simus | ninetiethC. | cente(n)simus | hundredthCC. | ducente(n)simus |  two-hundredthCCC. | trecentensimus | three-hundredthCCCC. | quadringentensimus |  four-hundredthD. | quingentensimus | five-hundredthDC. | sescentensimus | six-hundredthDCC. | septingentensimus | seven-hundredthDCCC. | octingentensimus | eight-hundredthDCCCC. | nongentensimus | nine-hundredthM. | millensimus | thousandthMM. | bis millensimus | two-thousandth

New York State Unit Study - Geography, State Symbols Facts

New York State Unit Study - Geography, State Symbols Facts These state unit studies are designed to help children learn the geography of the United States and learn factual information about every state. These studies are great for children in the public and private education system as well as homeschooled children. Print the United States Map and color each state as you study it. Keep map at the front of your notebook for use with each state. Print the State Information Sheet and fill in the information as you find it. Print the New York State Outline Map and fill in the state capital, large cities and state attractions that you find. Answer the following questions on lined paper in complete sentences. State Capital What is the capital?Virtual Tour of the State CapitolState Flag What is Justice holding and what do they represent?Flag Quiz/PrintoutState Flower When was the state flower officially adopted?State Fruit When was the state fruit adopted?State Bird When do these birds return north?State Animal What is the state animal?State Fish Where are these fish found?State Insect How does this insect help gardeners?State Fossil What crab is this fossil related to?State Shell How do these scallops swim?State Tree When was the state tree adopted?State Gem What color is this gem?State Song Who wrote the state song?State Seal When was the current seal created?State Motto What is the state motto and what does it mean?State Muffin Make this state muffin and enjoy with the state beverage!State Beverage What is the state beverage? New York Printable Pages - Learn more about New York with these printable worksheets and coloring pages. Fun in the Kitchen - The official muffin of New York State, the Apple Muffin, was created by elementary school children in North Syracuse, New York. Try their official recipe. Presidents born in New York: Theodore RooseveltFranklin Delano Roosevelt History - Learn about the history of New York. Big Apple Factoids - A New York Matching Game - be sure to read the facts after you find the match! New York Underground - New Yorkers go about unaware of what is happening just beneath their feet: Power pulses, information flies, and steam flows. Go on this virtual field trip underground! Niagara: The Story of the Falls - Take a journey down the perilous Niagara River, play the daredevil trivia adventure, explore the timeline of falls firsts, and discover surprising stories in snapshots of the falls. Empire State Building - Find fun facts, go on a photo tour, and play some games. The Chrysler Building - Pictures of this New York City skyscraper. Word Search - Find the hidden New York related words. Coloring Book - Print and color these pictures of the New York state symbols. Fun Facts - What is the states longest river? Read these fun New York facts and find out. Capitol Minutes - Short audio presentation of historical and educational interest. Buck Mountain - Take a virtual hike up Buck Mountain. Crossword Puzzle - Can you solve the crossword puzzle? Word Find - Find the hidden New York State Regions. Word Scramble - Can you unscramble these New York State symbols? Odd New York Law: It used to be illegal to ring the doorbell and disturb the occupant of a house.

MIS Essay Example | Topics and Well Written Essays - 750 words

MIS - Essay Example McDonalds is a leading multinational fast food chain whereas Apple Inc. on the other hand is an American multinational whose core business is designing, developing as well as selling consumer electronics, online services, computer hardware as well as personal computers. The two companies use MIS differently so as to achieve their business goals as well as objectives. Management information system for most organizations entails a system that offers information required in management of organizations efficiently.MIS consists of 3 fundamental resources that include; information, technology as well as people; with people being the most significant resource. The information received usually supports the everyday decision making in the working areas. McDonalds MIS is implemented and utilized in the production of periodic reports like everyday list of employees as well as the hours they have worked, or monthly record of expenses in comparison to a budget. McDonalds therefore makes use of MIS since the objective of MIS is provision of profitability as well as information to assist managers together with staff comprehend the performance of business as well as its future direction. In addition, MIS impacts McDonalds in ensuring timely and accurate transaction processing, streamlining records together with accounting management, in the process standardizin g business processes at McDonalds.MIS also offers interactive support to mangers assisting them in making critical decisions for McDonalds as well as providing a systematic easy formats for digging out important information as per particular needs .MIS therefore greatly helps McDonalds in saving time thus enabling the restaurant chain to gain a lot of competitive advantage as compared to others (Hossein, 2011). On the other hand Apple Inc is a company whose main goal is to always be an innovation leader. This is the same philosophy that extends even in the way that they manage

Article Review Essay Example | Topics and Well Written Essays - 250 words - 4

Article Review - Essay Example egal business issues raised in SOX Act include corporate and accounting scandals,corporate board responsibilities,criminal penalties,auditor independence,internal control assessment,corporate fraud accountability,financial disclosure and corporate governance. This legal issues in the SOX Act require Securities and Exchange Commission to implement rulings on requirements to comply the law Holt (2008). According to Holt (2008) the SOX Act may affect ethical decision making in today’s business environment positively by improving the confidence and behaviours of investors with regard to the uprightness of corporate financial statements. The SOX Act introduced a regulatory business environment into the United states financial markets hence the investors are safe to conduct their businesses without corrupt business practices. Weak corporate governance procedures made had made it impossible for businesses to grow but with the enactment of the SOX Act this problem was reduced. Other legal issues that affected businesses prior to the SOX Act are auditor conflicts of interest,boardroom failures and inadequate funding from the Securities Exchange Commission. These problems were however solved with the anactment of the SOX Act. The act had a code of conduct containing requirements regarding corpoarte governace,financial practices, criminal penalties for those who violate the rules and accounting controls. The SOX Act provides criminal penalties for influencing United States agency investigation. Section 802 of Sarbanes-Oxley Act states that anyboby who destroys or makes a false entry in any record or document with the intent to influence proper administration of any matter within the jurisdiction of any department of the United States or any case filed under title 11,shall be fined or imprisoned not more than 20 years,or both. Other criminal penalties are taken against corporate officers who fail to certify financial statements and reports and those that harm others

Advertising Strategy and Planning Essay Example | Topics and Well Written Essays - 1000 words

Advertising Strategy and Planning - Essay Example About 6% of the UK population is vegetarian which approximately 3.5 million individuals are. In early 1990’s this population was about 3-4% (Case study notes). The diet for vegetarians comprises of nuts, seeds, fruits, vegetables and grains and at times eggs and products. Fundamentally a vegetarian does not take fish, meat or poultry. There is a considerable section of the UK population that inclines towards minimizing meat in their diet. According to the survey conducted by TGI, 6.3% of the people admitted to be vegetarian while 13.3% admitted to have done away with meat diet on voluntary basis (Case study notes). The largest populations of vegetarians are women aged between 20 and 44 years and those living in the southern part of UK (The Vegetarian Society 59). There is a close relationship between the high consciousness of issues to do with environment and the vegetarians like carbon footprint, sustainability and global warming. The forces for the pattern in consumption of less quantity of meat are attributed to the current lifestyles and an interest in wellbeing and health. The five day campaign launched by the government in 2003 encouraging five segments of vegetables and fruits per day is attributed with the supporting awareness of the advantages of consuming vegetables and fruits (The Vegetarian Society 59). The rise in ethnic food has resulted into more foreign spices and savoring into the diet of the country and supported increased shift away from the conventional diet of two vegetables and meat. There are about 110,000 restaurants in UK with joint sales revenue of  £25 billion (Powers and Cathy 47). Even though majority of the restaurants provide vegetarian foods, reasonably very few offer exclusively vegetarian alternatives. To use 5% of the advertisement budget on social media, 39% on digital advertisement, 27% on public relation, 18% on

Social Security Research Paper Example | Topics and Well Written Essays - 2000 words

Social Security - Research Paper Example Social security also provides income for those people who have become disabled and can no longer work and for those spouses and children whose wage earner has passed away. Thesis Statement Social Security is facing a long-term financial problem but it is not a crisis as some are trying to lead everyone to believe. Background Social Security as an Agency The United States was among those lagging behind major developed nations to set up a social security organization. In 1911, Wisconsin was the first state that approved the first state workers' reimbursement law to be held legitimate. It was the time when most Americans assumed the government should have no consideration to bother for the elderly, disabled, or disadvantaged. But such approaches altered during the critical period of Great Depression of the 1930's. Many Americans at this specific point of time sensed economic calamity or failure could outcome from happenings over which workers or government had no control. In 1935, Congr ess passed the Social Security Act. This law became the basis of the U.S. Social Security system. It provided cash benefits only to retired workers in commerce and industry. In 1939, Congress amended the act to benefit wives and dependent children of deceased workers. In 1950, the act commenced to cover numerous farm and domestic working classes, self-employed workers, technical and vocational workers, nonprofessional and many government and local bodies’ employees. Coverage became almost worldwide in 1956, when legal professionals and other professional workers of different fields came under the scheme. Congress further added disability insurance for the special employees to the system in 1956 and thus Medicare was set up in 1965. In the late 1970's, prices increased much faster than wages. This trend caused benefits to rise more rapidly than payroll tax revenues and resulted in a major drain on the Old-Age and Survivors Insurance Trust Fund. The law accelerated parts of a p reviously scheduled tax increase and expanded the categories of workers covered under Social Security. It required all federal employees hired after 1983 to join the system. The law also required the participation of about a million employees of nonprofit organizations. The legislation made up to 50 percent of the benefits of some higher-income retired people subject to federal income taxes and gave the resulting revenues to the Social Security trust funds. In addition, the law required a gradual rise in the normal retirement age. From the mid-1960 through the mid-1980, the tax-paying labor force was enlarged by the entry of the baby boom generation that is, the group of people born during a period of high birth rates from 1946 to 1964. Also, low birth rates in the 1920's and 1930's resulted in a relatively small population of retirees in the 1980's and 1990's. Because of these developments and because of the 1983 legislation and strong economic growth Social Security costs as a per centage of earnings subject to the FICA tax declined significantly from 1986 to 1989. This percentage began to rise again in the early 1990's. (Justice, 2005) George Bush Era and social Security George Bush has been working on a proposal to privatize the social