Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Beard Company purchased a machine on January 1 2014 for $620000 The machine is expected to...

Beard Company purchased a machine on January 1 2014 for $620000 The machine is expected to have a 10 year life no residual value and will be depreciated by the straight line method On January

Beard Company purchased a machine on January 1, 2014, for $620,000. The machine is expected to have a 10-year life, no residual value, and will be depreciated by the straight-line method. On January 1, 2014, it leased the machine to Child Company for a three-year period at an annual rental of $125,000. Beard could have sold the machine for $817,298 instead of leasing it. Beard incurred maintenance and other executory costs of $5,000 in 2014 under the terms of the lease.

Required:

1. What amount should Beard report as operating profit on this leased asset for the year ended December 31, 2014?

2. Assume that the lease term is eight years instead of three years. What amount should Beard report as operating profit on this leased asset for the year ended December 31, 2014?

May 24 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions