Your firm is considering leasing a magic box. The lease lasts for three years. The lease calls for three payments of $1,350 per year with the first payment occurring at lease inception. The magic box would cost $3,600 to buy and would be straight-line depreciated to zero salvage value over three years. The firm can borrow at 6 percent, and the marginal corporate tax rate is 21 percent. What is the NPV of the lease?
A. ?$65.75
B. ?$146.51
C. $30.50
D. ?$30.50
Answer: B
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Which of the following statements is true about initial direct costs?
A) Initial direct costs should always be debited against income by the lessor in the period of the inception of the lease. B) Initial direct costs are ownership-type costs such as insurance, maintenance, and taxes. C) Initial direct costs of an operating lease should be recorded by the lessor as a prepaid asset. D) Initial direct costs of a sales-type lease should be expensed as incurred, and an equal amount of the unearned income should be recognized as income in the same period.
Match the following definitions and terms.
A. Products a company owns and intends to sell. B. Inventory losses that can occur as a result of theft or deterioration and require an adjusting entry to account for those losses. C. The point of transfer from seller to buyer that takes place when the goods arrive at the buyer's place of business. D. A measure of a company's ability to pay its current liabilities that excludes less liquid current assets such as inventory and prepaid expenses. E. A given percent deducted from a list price often granted to customers purchasing large quantities of merchandise. F. The point of transfer from seller to buyer that takes place when goods depart the seller's place of business. G. An income statement format that shows detailed computations of net sales and other costs and expenses, and reports subtotals for various classes of items. H. The expenses of promoting sales by displaying and advertising merchandise, making sales, and delivering goods to customers. I. A widely used income statement format that lists cost of goods sold as another expense and shows only one subtotal for total expenses. J. The expenses that support a company's overall operations and include costs related to accounting, human resource management and financial management.
On occasion, disgruntled former and current employees use various means to level criticism against, or create embarrassment, with regard to their former or current employer. Employers in turn will file law suits to stop the employee's communications. What effect do these employer lawsuits have?
Worker's compensation costs have been declining since 2005 partly because of employer safety programs.
Answer the following statement true (T) or false (F)