he Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance.Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings wasR125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The landwould be classified as_______. Select one: a. an accounting lease b. a finance lease c. a financial lease d. an operating lease

he Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance.Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings wasR125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The landwould be classified as_______. Select one: a. an accounting lease b. a finance lease c. a financial lease d. an operating lease

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 11MCQ

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The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance. Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings was R125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. How much of the R26 720 annual payment would be allocated to the operating lease? Select one: O a. R14 322 O b. R9 339 O c. R13 360 O d. R13 369
A lessor made an investment in an asset with net cost of investment of ₱800,000 and intends to lease it out for a 5-year term. He determined that he will incur an annual cost of ₱250,000. Tax rate is 25%. Annual depreciation is ₱160,000. Cost of capital is 15%. The breakeven lease per year would be? ₱ 494,450 ₱ 471,503 512,356 ₱ 323,886 ₱ 361,417 ₱ 514,876
The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance. Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings was R125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. The land would be classified as Select one: O a. a finance lease O b. an accounting lease O c. a financial lease O d. an operating lease
The Arcade Company entered into a 10 year lease under which it made payments of R26 720 annually in advance.Arcade's borrowing rate was 10% per annum. The present value of the land was R125 000 and that of the buildings wasR125 000. The value of the land at the end of 10 years was R167 500 and the value of the buildings was R32 500. What isthe present value of the operating lease?Select one:a.None of the given options is correctb.R125 000c.R64 571d.R48 188
A freehold office was let 12 years ago at a rent of RM1,800,000 per annum (net). The lease was for 15 years subject to 5-yearly rent review pattern. The required rate of return for this type of property is 12%. Value the freehold property if the All Risk Yield is 8% and gross full rental value is RM3,200,000 using the following; a) Traditional Method of Valuation
At the beginning of current year, JadeCompany purchased a new machine forP4,800,000 and leased it to East the same day.The machine has an estimated 12-year life andwill be depreciated P400,000 per year. The leaseis for a three-year period at an annual rental ofP850,000.Additionally, East paid P300,000 to Jade as alease bonus to obtain the three-year lease. Jadeincurred insurance expense of P80,000 for theleased machine during the current year.What is the operating profit of the lessor on theleased asset for the current year?
A small shop was recently let on a 6-year lease at a net r ent of $10,000 per month for the first3 years and $11,000 net per month for the remain ing years. The current market rental value of the shop s $12,000 net per month. The f eehold interest rate for a similar property is 7% and the sinking fund rate is 3% per ann um. Please advise on the capital value of the freehold and leasehold interest of the shop
Smart Ltd negotiated a lease for equipment on the following terms: the lease had a 3 year term; the purchase price of the new equipment was R41 250; there were to be 3 annual payments of R15 000 payable in advance; and Smart Ltd was able to borrow at 10% per annum. The finance charge in the first year using the sum of the digits method would be Select one: O a. R2 500 O b. R4 125 O c. R15 000 O d. R1 500
2. ABC Realty sold a piece of land for P250,000. A down payment of P50,000 was made and the remainder is to be paid in equal semiannual installments, the first due 6 months after the date of sale. The interest is 8% compounded semiannually and the debt is to be amortized in 5 years. a. How much semiannual payment is required? b. What will the total amount of the payment be? c. How much interest will be paid? d. What is the total cost of the property? e. Prepare an amortization schedule for the present value of the loan after making the down payment.
D4) Finance Cda leased plant over five years. Annual payments were £x in arrears with interest rates at 5%. Licensing fees to operate this plant cost GHI £y. Calculate the Right-of Use value of this asset in GHI’s accounts
Darwin Limited entered into a lease agreement on 1 July 2020 for its demolition machinery. The duration of the lease is four years. The cost price of the machinery was R1 800 000. Installments of R432 649 are payable annually in arrears on 30 June. The implicit interest rate is 15% per annum. Ownership will be transferred to Darwin Limited at the end of the lease term. Darwin Limited depreciates machinery over 10 years using the straight-line method, with nil residual value. The wear and tear allowance on machinery is at a rate of 25% per annum using the straight-line method. REQUIRED: Show ONLY the following three-line items in the Statement of Financial Position as at 30 June 2021: Right of use asset Current portion of lease liability Lease liability
Cassandra Company decides to enter the leasing business. The entity acquires a specialized packaging machine for P3,000,000 cash and leases it for a period of 6 years after which the machine is to be returned to Cassandra Company for disposition. The guaranteed residual value of the machine is P200,000. The lease term is arranged so that a return of 12% is earned by Cassandra Company. 1. What is the annual rental payable in advance required to yield the desired return?