On 1/1/2014, NH Ice Cream Company signed a non-cancelable lease for an ice cream machine for 10 years. The lease requires NH to pay $160K at each…

1. On 1/1/2014, NH Ice Cream Company signed a non-cancelable lease for an ice cream machine for 10 years. The lease requires NH to pay $160K at each year end for the whole lease term. After 10 years, NH would get the title. The ice cream machine is expected to last 15 years with zero residual value. As for its other machines, NH depreciates its PP&E using the straight-line method. The CFO at NH classified this lease as a capital lease. The PV of lease payments is $1M with 9.0% effective interest rate. What should be the accounting entries that NH record for 2014?

a. lease expense of $160K.

b. interest expense of $66.7K and depreciation expense of $56.7K.

c. interest expense of $90K and depreciation expense of $66.7K.  

d. interest expense of $68K and depreciation expense of $100K.

2. Let’s assume Boeing sells its airplane to Delta Airlines and then leases it back for a gain. How should Boeing treat this gain on the sale? a. It should recognize in current year. b.It should recognize it as prior period adjustment. c.It should recognize it when the lease expires. d.It should first defer it and recognize over the lease term as income. 

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more