peaceful9321
Apr 4, 2011, 07:38 AM
Griffin Inc has authorized 500,000 shares of 10%, $10 par value, cumulative preferred stock. There were 100,000 shares issued and outstanding at all times during 2010. The firm also has authorized 5 million shares of $1 common stock, with 4 million shares issued and outstanding.
On January 2, 2010, Griffin Inc. acquired an asset, a piece of specialized heavy equipment for $8 million with a capital lease. The lease contract indicates that the term of the lease is eight years. Payments of $1.5 M are to be made each Dec 31. The lease payment was made December 31, 2010 and consisted of $1 million principal and $0.5 M of interest expense. The capital lease is depreciated using the straight-lime method over eight years with zero salvage value.
Required:
Assuming that the equip was acquired using a capital lease, identify and analyze the effect of the acquisition, depreciation, and lease payment.
I need the required question answered, having trouble with it.
On January 2, 2010, Griffin Inc. acquired an asset, a piece of specialized heavy equipment for $8 million with a capital lease. The lease contract indicates that the term of the lease is eight years. Payments of $1.5 M are to be made each Dec 31. The lease payment was made December 31, 2010 and consisted of $1 million principal and $0.5 M of interest expense. The capital lease is depreciated using the straight-lime method over eight years with zero salvage value.
Required:
Assuming that the equip was acquired using a capital lease, identify and analyze the effect of the acquisition, depreciation, and lease payment.
I need the required question answered, having trouble with it.