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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Federated Fabrications leased a tooling machine on January 1, 2024, for a three-year period ending
December 31, 2026.
The lease agreement specified annual payments of $43,000 beginning with the first payment at the
beginning of the lease, and each December 31 through 2025.
The company had the option to purchase the machine on December 30, 2026, for $52,000 when its fair
value was expected to be $67,000, a sufficient difference that exercise seems reasonably certain.
The machine's estimated useful life was six years with no salvage value. Federated was aware that the
lessor's implicit rate of return was 10%.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1)
Required:
Calculate the amount Federated should record as a right-of-use asset and lease liability for this finance
lease.
Prepare an amortization schedule that describes the pattern of interest expense for Federated over the
lease term.
Prepare the appropriate entries for Federated from the beginning of the lease through the end of the lease
term.
Please shown the detailed works, thanks so much
Expert Solution
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- 1. Choose the ethical considerations that Amahle Khumalo should recognize in deciding how to proceed. Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. Check my work is not available. Khumalo should exercise initiative and good judgment in providing management with information having a potentially adverse economic impact Khumalo should determine whether the controller's request violates her professional or personal standards or the company's code of ethics. ? Khumalo should protect proprietary information and should not violate the chain of command by discussing this matter with the controller's superiors ?Khumalo should not try to convince the controller regarding the probable failure of reworks.arrow_forwardA Framework for decision making: a. can help reduce the unexpected consequences of our actions. b. is not needed if the activity is legal. c. helps identify who gains the most from a decision.arrow_forwardwhat exactly is a cookie jar reserve? Does using a cookie jar reserve follow GAAP? Does using a cookie jar reserve appear to be an ethical practice? Support your opinion. Your post should be more than a single sentence.arrow_forward
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