1) Smith & Jones has been asked by Levi Manufacturing to quote on a 4-year lease...

80.2K

Verified Solution

Question

Accounting

1) Smith & Jones has been asked by Levi Manufacturing toquote on a 4-year lease for a machine which costs $375,000. Theequipment can be depreciated for tax purposes over 4 years.
The equipment has a residual value expected to be $15,000 to bereceived at the end of the lease period which is taxed at thecorporate tax rate.
Otherdetails:
Company's Cost ofCapital                                           10%
Corporate TaxRate                                                         30%
All lease payments are received in advance, at the start of theyear - (annuity due).
Required:
What is the ANNUAL LEASE PAYMENT that Smith andJones should quote Levi Manufacturing?
2) Johnny Johnson commenced worked at the Jenson Laboratories onthe 15^th June 1994. He is currently earning currentlyearning $76,500 per year.
Long service leave entitlement is calculated as 10 weeks leaveafter the first 10 years of service and 10 calendar days for everyyear worked in excess of 10 years (proportionate leave for partialyear)
Required:
As at 31^st May 2017, calculate the amount of moneyowing to Johnny for his Long Service Leave entitlement.

Answer & Explanation Solved by verified expert

4.2 Ratings (904 Votes)

Answer 1Given Initial Cost 375000The equipment can be depreciated for tax purposes over 4yearsDepreciation Per year 375000 4 93750Salvage value 15000As book value at the end of year 4 0 tax on salvage value 15000 30 4500Salvage value net of tax 15000 4500 10500Cost of capital Rate See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

1) Smith & Jones has been asked by Levi Manufacturing toquote on a 4-year lease for a machine which costs $375,000. Theequipment can be depreciated for tax purposes over 4 years.The equipment has a residual value expected to be $15,000 to bereceived at the end of the lease period which is taxed at thecorporate tax rate.Otherdetails: Company's Cost ofCapital 10% Corporate TaxRate 30% All lease payments are received in advance, at the start of theyear - (annuity due).Required:What is the ANNUAL LEASE PAYMENT that Smith andJones should quote Levi Manufacturing?2) Johnny Johnson commenced worked at the Jenson Laboratories onthe 15th June 1994. He is currently earning currentlyearning $76,500 per year.Long service leave entitlement is calculated as 10 weeks leaveafter the first 10 years of service and 10 calendar days for everyyear worked in excess of 10 years (proportionate leave for partialyear)Required:As at 31st May 2017, calculate the amount of moneyowing to Johnny for his Long Service Leave entitlement.