Ancient Chinese Inventions and Contributions

Antiquated Chinese Inventions and Contributions Humanities 111 Professor Abstract The accompanying paper will show the commitments from old Chinese culture is stunning. There are numerous creations and commitments that follow back to old Chinese culture. The main ten developments and commitments keep on continuing giving in today’s society. Old Chinese has added to helping employments to exist, battle wars, and add to the general open lives with their creations and contributions.We as individuals living and continuing on ahead never truly set aside the effort to consider where and who has developed the delights we experience every day. One model is our own one of a kind cub scouts, go on a major celebration consistently. They ordinarily go outdoors and climbing. A compass is utilized during this time span. If you somehow happened to ask the normal boy trooper, who imagined the compass? Many couldn't tell who or when was the compass concocted. Old Chinese four most valuable com mitments or developments made were black powder, the compass, paper making, and printing.These four creations are extraordinary in their own specific manner. I will clarify why these four are the most valuable innovations made by old Chinese. One of only a handful scarcely any dangerous innovations of old Chinese development was that of black powder. The disclosure of black powder prompted the innovation of guns and altered combat zones in the Asian Continent. Chinese chemists, whom were scanning for a mixture of life, inadvertently found the unstable property of explosive at some point around ninth century AD. Before the finish of the tenth century, Asian forces had presented projectiles, rough bombs and guns onto battlefields.Use of guns and greater guns additionally got common. (Yinke Deng, 2005) The compass was one of the most significant innovative improvements in antiquated China because of the way that it advanced and helped investigation that was started by Chinese rulers. T he improvement of the compass made China the primary magnificent force on the planet. The Chinese domain was without a doubt named as a supreme force until the finish of government in China and the illustrious spot was otherwise called the Imperial Palace. The specific period or tradition during which the Chinese developed the innovation of paper producing is uncertain.It is sure that the innovation prompted a lot more progressions as it encouraged researchers, scholars and authors of Chinese human advancement. Paper that was concocted in old China was utilized as a mechanism of composing, however inventive Chinese pioneers likewise utilized it as a crude material for assembling packs just as paper cash. Paper making can be followed down to the Han tradition, which managed from 202 BC to 220 AD, when court official Cai Lun set out to the assignment of making paper. He conveyed mulberry, bast strands, and waste material, for example, old clothes and hemp squander. Yinke Deng, 2005) L un likewise utilized angling nets to tie the materials together. Some archeological discoveries in any case, recommend that paper in antiquated China may have been concocted during the eighth century BC. The innovation of printing is viewed as one of the most significant developments, because of the way that it made books less expensive. Less expensive books guaranteed an informed society. Numerous lines of squires and researchers from old China added to the improvement of the print machine. Printing innovation began advancing at some point around 868 BC, with the printing of the first printed book titled The Diamond Sutra.The book was printed with the assistance of the wood square printing. It had become a trend setting innovation before the finish of the Song administration. Author Shen Kuo, who was additionally a squire of Songs, advanced the utilization of printing for the spread of information. Bi Sheng, who was a craftsman, imagined the mobile artistic printing. Creators like Hua Sui additionally endeavored to imagine the metal castings and rollers for portable printing. There are eight to ten valuable creations and commitments from the antiquated Chinese that are still being used today.The ten old Chinese helpful innovations or commitments are paper money, line crops, profound penetrating for gas, firecrackers, black powder, the fire hurler, the parachute, the wheel hand truck, rudder, and the compass. Chinese creations have added to humanity from multiple points of view. A large number of their revelations begin in one shape and can stretch out to at least three final results. The four creations or commitments from the antiquated Chinese that have had the most effect on numerous nations and even changed the course of history partly were paper money, black powder, the parachute, and profound boring for gas.I trust them to be the most shrewd and imaginative of innovations. Paper cash changed the methods of taking care of cash. The hours of conveying gold coins and valuable metals to buy merchandise and enterprises were finished. Before paper money carrying gold and valuable metals around was hazardous and difficult to hide. Paper cash is lightweight, discrete, and still exists in the public arena today. Just as money, the manners in which that explosive has changed society are many. Black powder has added to the weapon, firecrackers, and explosives of numerous types.The use is wide gone and without the utilization explosive wars would have been much harder to win and significantly progressively crude in style. It is difficult to envision the common war without the utilization of black powder rifle weapons and guns. The creation of the parachute have likewise helped from multiple points of view. Parachutes have spared numerous pilots’ lives. At the point when a plane flops in the sky or during a war when a plane is destroyed, pilots can parachute to security. Parachutes have encouraged the United States troops with battling w ars on hostile areas. Profound penetrating for gas has helped numerous nations to all the more likely use their own resources.Deep boring for gas has helped the United States in the battle to practice environmental awareness and help the earth. The profound boring for gas method has given numerous Americans occupations in the over a wide span of time, and it is answerable for a lot of America’s pay. The old Chinese have designed and added to the disclosure of numerous things utilized in the public arena today. The one development I can't live without is paper cash. Cash is the thing that makes life as we know it possible. I use cash each day for a wide range of reasons. Regularly, I use cash (paper money) to buy gas, lunch, and beverages.On a week by week premise I use paper cash to lease DVDs, go out to see the films, take my significant other out to supper, and get my hair style. It has changed and encourage the world definitely. Paper cash is available for use from a wide range of nations and all fluctuate in worth and structures. References Yinke Deng. (October 2005). Antiquated Chinese Inventions. China. China Intercontinental press Suzanne Morgan Williams. (January 1997). Made in China: Ideas and Inventions from Ancient China. Berkley, California. Pacific Press. (2008). Creation of Paper. Recovered from http://www. culture-4-travel. com/development of-paper. html.

Writing a critique for an article Essay Example | Topics and Well Written Essays - 750 words

Composing an evaluate for an article - Essay Example The creator being bilingual had less mastery in English language and needed to confront trouble in the open where English was the main informative medium. The creator passes on that being bilingual is certainly not a simple encounter when one is less master in one of the bilingual dialects (Thesis). The writer in his article is telling the perusers that his kin communicated in Spanish at home and learned English at school. The creator here steps up to the plate and clarify the problem of Mexican transients in an America where all communicated in English. Creator additionally clarifies about the new â€Å"bilingual program† which was propelled by Government that permitted kids to utilize their family language in school. Be that as it may, he is basic about this arrangement as he trusts it unthinkable for a kid to utilize any language separated from English in American school condition. In his article (Rodriguez 26) composes that â€Å"It isn't workable for a kid, any kid ever to utilize, ever to utilize his family language in school†. Creator is clarifying about the anxiety his family felt in American land, yet can he not treat it as one of the penance he have to experience so as to get a quality life in America. Despite the fact that being bilingual is a mind boggling marvel, after an impressive time, he would have gotten master in English which would helped his future massively .It is a well established truth that there is no addition without torment and this bilingual issue could have trifled with additional by the creator. The creator clarifies that in school he was just permitted to Speak English. As author’s family had associate with their family members he delighted in the Spanish language just at the solace of home. He alluded to Americans as â€Å"los gringos† which delineates the distance he felt inside the American culture. Writer describes to the perusers that he was dull in English language and had no certainty of communicating in this unknown dialect. As indicated by (Rodriguez 27) â€Å"My own sound I couldn't hear, however I realized that I communicated in English

Writing About John Lennon - Essay Samples

Writing About John Lennon - Essay SamplesWhen you are looking for ways to learn about John Lennon and his life, then you should consider looking for John Lennon essay samples online. There are a number of sites that are dedicated to providing information about the life of this great poet and songwriter. Some of these sites will provide an essay sample, while others will not.You can find all sorts of John Lennon essay samples in a number of places on the internet. The first place you should go is the site that has been dedicated to giving you information about Lennon. This site will be very informative, and it will contain everything you need to know about Lennon's life and accomplishments.Another place you should consider looking is at the site called Serena Marshall. Marshall is a great writer and she can offer you many essays and other forms of written material on the life of John Lennon. She also provides many places where you can get your essay samples.The other place you can get your literature samples from is the internet. You will find a number of sites online that offer free literature samples of Lennon, but you should pay close attention to their terms of service before you agree to use their resources. If you have questions about what the site is offering, you should feel free to ask them and not just accept anything without questioning the information first.It is very easy to find a variety of John Lennon essay samples on the internet. Many people choose to go to sites that offer such information as a part of their membership. Other people choose to buy books about Lennon, and the books they purchase may also come with literature samples that they can read online. Either way, the person who is looking for literature samples of Lennon will be able to find them easily and quickly.Those who really want to understand how John Lennon grew and wrote his most popular songs may find some great writing on the site 'J.R.R. Tolkien: Guide to Middle Earth.' This site features many essays that look at the Tolkien world and look at the creation of the songs that were written about it. Those who really want to understand the world that Tolkien created may find this a great place to begin their understanding of the man. Those who have not read Tolkien's books may find that reading his essays is a great place to start.John Lennon essay samples are a great place to begin your understanding of the life of John Lennon. It is possible to find them in many places on the internet, so no matter what you are interested in, you should never have any trouble finding one. They will be a great way to get you started when you are ready to take the next step and learn more about John Lennon and his life.When you are looking for ways to understand the life of John Lennon, you should consider using the writings of Serena Marshall, J.R.R. Tolkien, and other writers who are writing about John Lennon. You can learn a lot about this great poet by doing this, and t his knowledge will help you understand the world that he came from.

Beyond The Healthy Marriage Initiative - 1240 Words

Chaney, C. (2009). Beyond the Healthy Marriage Initiative: How Extension Agents can promote healthy relationships among low-income, cohabiting African American Couples. North Carolina State University Extension. The Healthy Marriage Initiative provided funds to allow various programs to be organized to help fulfill its goals of promoting healthy marriages. The author suggested that extension agents have understanding in how they can help accomplish the coals of the Healthy Marriage Initiative in regards to low-income, African-American couples, with children. Chaney provides background and research of cohabitating and single parenthood in African American families. She further discussed the African American Healthy Marriage Initiative (a branch of the original Healthy Marriage Initiative), in which cultural competency and the responsibilities of fathers are stressed. Chaney, based on previous research, suggested that extension agents should be aware of their values and biases regarding cohabitating families and recognize the context of cohabitating relationships. Extension agents can provide specific examples to families of ways in which their families can be strengthened. They can further help families understand the effects of poor and low-quality relationships. Finally, the author suggests specific ways in which extension agents can better understand the context and climate surrounding cohabiting families, as well as the goals of these families. Fincham, F.D., Beach,Show MoreRelatedRhetorical Analysis Of Divorce920 Words   |  4 Pagesespecially those which have children. †Currently, about 46 percent of all marriages are projected to end in divorce† (953). It is slowly becoming considered more, and more normal everyday. In the article â€Å"Strengthening marriage is an appropriate social policy goal†, Paul R. 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Nutritional Knowledge And Athletes Nutrition - 1661 Words

Tyler Inch Nutrition Paper Nutritional Knowledge and Athletes How well do you know nutrition? Do you know the recommended daily intakes of the three macronutrients – carbohydrates, proteins, and fats? All people have varying levels of nutritional knowledge and there are a number of ways that a person can go about enhancing their nutritional knowledge including Internet research and speaking with a nutritionist or dietitian. However, no matter how much any person knows about nutrition, one would most likely assume that a person with more knowledge of nutrition would make healthier or better decisions regarding nutrition. Nutrition can be difficult enough for anyone but being an athlete changes a person’s dietary needs, which makes the necessary nutritional knowledge of an athlete different from that of others. In recent years, there have been a number of studies done regarding the nutritional knowledge of athletes and their nutritional habits. 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Chronic Diseases of Lifestyle Free Essays

Many people do not think about the long-term health implications of their lifestyle choices. Most of us seem to think â€Å"it won’t happen to me† when it comes to chronic diseases. Since we all know that we can safely eat a candy or even as many as thousands of candies or lay on the couch watching television day after day without seeing any immediate harmful effects, it can be difficult to imagine that we are slowly developing chronic diseases over time. We will write a custom essay sample on Chronic Diseases of Lifestyle or any similar topic only for you Order Now This concept of developing diseases over time from the specific lifestyle choices that each of us makes, is known as chronic diseases of lifestyle (CDL). It is unfortunate that these chronic diseases of lifestyle are becoming the norm in Canada. According to the Public Health Agency of Canada, â€Å"the four leading causes of preventable deaths and disabilities in Canada are cancer, diabetes, cardiovascular disease, and lung disease†. 1 Other preventable diseases associated with the typical Canadian lifestyle include obesity, gallstones, osteoporosis, and gastrointestinal conditions such as constipation, diverticular disease, and hemorrhoids. This risk of developing the aforementioned diseases can be greatly reduced simply by making changes to our diets, refraining from using cigarettes and other substances, and adding exercise as part of our daily routines. Overweight and obesity are on the rise in Canada. This is likely not shocking news to most Canadians as it has been continually climbing for decades now. According to Statistics Canada, â€Å"nearly one in four of all Canadian adults are obese†. 2 Obesity is defined as having an excessive amount of body fat. In quantifiable terms, a Body Mass Index (BMI) of 30 or over is considered obese. Some of the factors leading to Canada’s rising obesity rates include our reliance on labour-saving devices, inactive lifestyles, huge portion sizes, and increased consumption of processed and refined foods. Obesity carries with it many long-term health risks such as heart disease, diabetes, hypertension, as well as some types of cancer. Making dietary changes, increasing physical activity, and losing weight can have a significant impact on reducing the risk of becoming obese and on developing a related disease. Increasing intake of dietary fibre, decreasing intake of fats and sugars, controlling calories, and exercising are all excellent ways of positively influencing the risk of obesity. Obesity is a major risk factor for type 2 diabetes. â€Å"Nearly 80% of people with type 2 diabetes are also obese†. 4 The increased dietary intake of most obese people contributes to the high blood glucose levels characteristic of diabetes. Over time, the high blood glucose levels associated with diabetes can lead to other serious health problems. An important factor in the development of type 2 diabetes is rapid digestion and absorption of sugar and starch which causes blood glucose levels to rise. Lack of dietary fibre allows for rapid digestion and absorption of starch since fibre usually slows down the digestion and absorption of glucose. So in short, the three key factors that affect the risk of type 2 diabetes are overweight or obesity, exercise and intake of fibre. Coronary heart disease and hypertension make up the cardiovascular diseases which are the leading cause of death among Canadians. The main risk factor for coronary heart disease (CHD) is high blood cholesterol. Other risk factors include diabetes, overweight/ obesity, high blood pressure, smoking, lack of physical activity, unhealthy diet, and stress. It appears that there is a pattern developing of the lifestyle choices and related chronic diseases of lifestyle. So what is CHD? CHD is a disease caused by the build-up of plaque in the arteries. This build-up of plaque, which is known as atherosclerosis, blocks the flow of blood to the heart muscle which can result in a heart attack. In order to reduce the risk of CHD, it is important to lower LDL cholesterol. This can be done by lowering intake of fat, especially saturated and trans fat. It is also helpful to increase intake of viscous or soluble fibre since it binds cholesterol with bile juices and slows cholesterol production through bacterial fermentation. Certain nutrients, phytochemicals, and antioxidants slow the oxidation of LDL cholesterol, thus slowing the growth of artery clogging plaque. The dominant risk factor for strokes is hypertension or high blood pressure. Other risk factors include atherosclerosis, diabetes, and obesity. As we already know, all of these risk factors can be prevented and the biggest weapon for prevention is diet. The best prevention technique is to lower intake of sodium. Other techniques to prevent hypertension are weight management, adequate potassium intake, decreased alcohol and caffeine consumption, and exercise. â€Å"Cancer can be attributed to as many of 30% of all deaths of Canadian adults making it the second leading cause of deaths among Canadians. 1 The many different types of cancer are often influenced by our lifestyle choices. The causes of cancer are plentiful but the leading three causes are tobacco use, overweight/ obesity (diet), and physical inactivity. Increased intake of fruits and vegetables and of course not smoking are helpful in preventing lung cancer. Fibre is linked to a decreased risk of colon cancer. Obesity is the dominant risk factor for breast cancer. Cancer prevention is aided by a di et consistently high in intakes of fruits, vegetables, whole grains and their phytochemicals. There is clearly a common theme in the prevention of chronic diseases of lifestyle: Eat plenty of fruits, vegetables, and whole grains, practice weight management, exercise daily, and don’t smoke! It is also clear that all of the chronic diseases of lifestyle are related to one another so if you develop one of them, you are at an increased risk for developing the others. Making just small changes to your lifestyle can have a significant impact on your risk of developing a CDL. It is obvious that increasing fibre intake is very beneficial in the prevention of certain diseases, as well as limiting fat, sodium, and sugar intake. It’s amazing that these simple changes can prevent the development of many of the diseases that Canadians suffer and die from everyday. All of the chronic diseases of lifestyle are related to each other and therefore, all are preventable. Since these diseases can often develop over a period of many years without any symptoms, we can slowly be slowly developing deadly diseases without even knowing it. That is why it is important to take preventative action now. How to cite Chronic Diseases of Lifestyle, Papers

Zongshen free essay sample

All of buly integrating them into the production. This change led Zongshen to improve its capabilities and to become a parts manufacturer. Manufacturing parts and using parts that it produced to assemble engines were a new objective of Zongshen. In order to improving quality and reliability of parts that it produced as well as to reduce production costs, Zongshen started applying advanced technology tools such as computer aided design and computer aided manufacturing to its product development. Besides, Zongshen also sought manufacturing consultant from former Honda employees and visited its competitors and prospective partners like Harley-Davidson in the United State. As a result, Zongshen was stood out in the common manufacturers throughout the country. Despite of the ability of producing parts in house; Zongshen still needed to purchase materials for its manufacturing. Zou understood that it would be a problem if Zongshen relied heavily on a small number of suppliers. Therefore, Zongshen worked with multiple suppliers for each part so that it could get competitive pricing. We will write a custom essay sample on Zongshen or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Consequently, it led to significantly reduce influences of suppliers. * Identify and analyze the factors that now make Zongshen’s value chain is now a source of innovation. There are few factors that lead Zongshen’s value chain to become a source of innovation. First, the technique that Zongshen used to raise its financial capital is very artful. Instead of following the tradition method which is through an initial public offering (IPO), Zongshen use another technique called â€Å"Reverse Merger† or â€Å"Backdoor Merger†. The technique can be described in detail that Zongshen had a target list of companies which had an existing list but lack of assets or liabilities. Once Zongshen could attain one from the list, it would merge its assets into. This technique is very critical to success of Zongshen. In fact, when it became the largest shareholder of a Chengdu company, it divested the assets of the original company and inserted its own assets from the engine company. As the result, it turned into the largest engine manufacturer in the Chinese motorcycle industry. Second, Zongshen was very excellent in catching up the trend of market. As they explained, they predicted a very fast growing opportunity in the China market for gasoline and electric motorcycles. In fact, there would be an increase in numbers of consumers who were willing to pay a premium to purchase for superior products. Besides, the Chinese policies would be stricter on safety and emission. These two conditions would be significant factors that reduced numbers of motorcycle companies, especially when the companies could not satisfy these perspectives. Consequently, Zongshen had invested in new technology and manufacturing facilities, as well as merged the gas and electronic motorcycle businesses of ZPP and ZIG in order to improve its operational collaborations. Third, Zongshen was always looking for advanced technologies and applying these technologies to optimization for its productions. Achieving in producing proton exchange membranes (PEM) which is a key element to produce hydrogen fuel cells is an example. The technology was applied in producing e-bikes and helped increase its sale volume dramatically. In fact, the sale volume of its premium e-bikes quickly escalated from 50,000 units in 2007 to over 220,000 units in 2008. Fourth, Zongshen was always seeking opportunities in corporation and development. They would invite a potential partner to visit its subsidiaries and to see if the company’s objectives complied with the development strategy of Zongshen. Besides, they established a network of technical advisors to give them recommendations on acquisition of technologies. For instance, in case they needed to know about lithium battery, they would hire consultants from the International Lithium Battery Association. Use Teece’s Model to explore the firm’s transformation. In the beginning, the firm could find it very difficult to become a successor if the Chinese regulations were strict on violations of intellectual properties. With a small initial investment about CNY 500,000, the firm could not be able to operate a Ramp;D center. Even if they could create a new product, it could not compete with Japanese engines, which were considered as dominant designs in the industry. Fortunately, the government ignored the fact that designs of Japanese engines were being duplicated. It created a chance for Zongshen as well as others assemblers to assemble motorcycles that were similar to Japanese products but had very competitive prices. When becoming mature, Zongshen strived to control complementary assets, and it can be noticed in several stages of its development. First, acquiring a Chengdu company in 2003 which was a steel producer led Zongshen to become the largest engine manufacturer in the Chinese motorcycle industry. Second, buying PEM Technologies through Norstar Venture in Canada led Zongshen to be able to control the technology manufacturing proton exchange membranes, a key element in producing hydrogen fuel cell. Having this technology, Zongshen became very successful in manufacturing and selling e-bikes. In fact, its two subsidiaries could produce 350,000 units of e-bike a year. Its sale volume increased dramatically from 50,000 units in 2007 to 220,000 units in 2008. Moreover, Zongshen enhanced its effectiveness by collaborating with other established firms. Piaggio, for instance, became its partner in exploring rural markets. The corporation set up a new company and planned to manufacture 100,000 scooters a year. As a part of the new joint venture agreement, Zongshen would supply the company with a significant amount of parts. In fact, by 2005, Zongshen provided 35% of accessories and components of the scooter. It was expectedly increased by 50% in 2006. * From a strategic perspective: what resources, capabilities, and core competencies did the firm possess that facilitated its transition from copying knowledge to creating it? The resources, capabilities, and core competencies that Zongshen possessed create a tremendous foundation for it to become an innovator. It can be explained as several different factors. First, its human resources are among key factors leading to innovation. Zongshen was an established firm and had more than 10 years of experience in the Chinese motorcycle industry. Certainly, its employees obtained a lot of experience and knowledge in designing, developing, and manufacturing motorcycles as well as small gasoline engines such as lawn mowers, snow blowers, and related products. Besides, its top managers understood very well and applied successfully financial tactics to acquisitions during its development. These experience and knowledge are extremely valued to the transformation, and they require the involvement in practicing and working with the processes for a long period of time to be able to achieve. As the result, experience and knowledge that Zongshen’s employees and employers possessed are among crucial resources of its innovation. Second, being able to access to resources that lead to transform into innovation is another key capabilities that Zongshen possessed. This capability is established through its development and can be pointed out in several elements. The first element is about owning a Chengdu company, a steel manufacturer. This led Zongshen to be the largest engine producers in the Chinese motorcycle industry. The second element is about being the largest shareholder of PEM Technologies firm. Having the leading position, it generated Zongshen a treasured opportunity to approach PEM technology, which producing key elements of hydrogen fuel cells. The capabilities of controlling and applying PEM technology to its product development, Zongshen’s products became differentiated and accepted in the market. Sale volume of E-bikes, for instance, was increased dramatically to 200,000 units in 2008. The third factor is from a combination of technology and corporation. First, Zongshen’s management board recognized the benefits from use of technology to its product developments. In early years of its history, advanced software applications such as computer aided design, computer aided manufacturing, and computer numerical control were adopted to refine part designs and improve its production capability. Later on, Zongshen had established several Ramp;D centers serving its development strategies. Some of those were Zongshen PEM Chongquing Hydrogen Energy Ltd, researching a hydrogen fuel cell and another one in Erlang, developing its first innovation – Cyclone. Second, Zongshen established corporations that lead it to innovation. Some of the examples consist of that * It hired former employees of Honda to learn their work approaches and application of tools to help develop its product quality and upgrade its technology. worked with Swiss scientists in Canada in order to achieve PEM technology, * contracted a Taiwan industrial design firm to generate the finest design of Cyclone, and * cooperated with Piaggio to explore the rural market. * From a management perspective, what is a key problem that has emerged due to the firm’s transition from an imitator to an innovator? From a management perspective, the key problem that has emerged due to the firm’s transition fro m an imitator to and innovator is the challenge of looking for talented people who can lead it to result in intellectual property theft. Third, Zongshen may give up their advantage at innovation when involved in corporate venturing. In general, a corporate venture’s operation need to be independent of the parent firm’s supervisory in order to be successful. Therefore, the firm has to forgo the benefit of scale economies when engaging in corporate venturing. Plus, in case intellectual properties exist in the existing as well as new operations, the firm may find it more difficult to make use of this kind of asset. That is because the asset has to be assigned to the parent firm or the corporate venture.

Harringtons

What are Harringtons claims about the relationship between big business and government in the United States? Do you agree or disagree with them and why? He makes a proposal about one way to begin to address the problem (which he acknowledges is limited and not a complete solution by any means). If you agree that there is a problem, what are other ways (alternatively or in addition to his proposal) it could be addressed? He calls our current system corporate collectivism. He talks to a concept he refers to as trickle down, which is the concept of the government rewarding the corporate rich more than anyone else, and he thinks of it as the ruling policy of America. He believes that the rich makes much more money than everyone else. He even goes as far to suggest that the welfare system does much more for the corporate rich than for anybody else. His belief is that there is a structure of power that dictates pro-corporate outcomes to democratically elected representatives. In conclusion, he believes that the government will on all occasions maximize corporate priorities first and foremost. I dont know if I agree with him, I mean President Clinton didnt come from a rich family, (even though Bush did), but he proved that it is possible to come from a plain background and make the seat. His first job as President was to make a huge tax cut, isnt that for the people? I know that our g! overnment isnt perfect, I might just be young and naive but I dont know if there is this whole hidden conspiracy that Harrington seems to be pointing too. He suggests that we run the Hawkins-Humphrey Full Employment Bill, which would call for the President to make an analysis of all the investment decisions both public and private every year and use this information to figure out what level of unemployment will result. I dont know how much help this plan would be, but I couldn&...

Learning From Poetry

Learning From Poetry Learning From Poetry Learning From Poetry By Erin No matter what kind of writing you do, reading poetry can be a great way to improve your writing skills. The principles of poetry can be applied to nearly every kind of writing you do. Lets take a look at what we can learn from poetry. 1. Poetry teaches word economy. In a poem, not a single word is wasted. Poets strive for finding the most effective words to convey each thought, emotion or idea. 2. Poetry uses powerful imagery. Poems are the epitome of show, dont tell. In a poem, you dont have a lot of time or space to spend narrating or telling the reader whats happening. Poets create strong visuals for their readers, truly giving the reader a glimpse of their subjects. 3. Poetry is inspiring. Love it or hate it, poetry elicits powerful emotions. A well-crafted line of poetry can stick with us for a long time. Sometimes, a poem or even just a memorable line, can make us want to write about that. The emotional response we have to the poem can often lead to an outlet for our own ideas. Resources There are a number of sites that offer daily poetry either delivered to your inbox or by RSS feed. The Writers Almanac from Garrison Keillor offers daily poems as well as historical information. Poetry Daily is another daily poem site. If you prefer, you can get get a haiku a day from Daily Haiku or tinywords. You can also check out any number of poetry anthologies. One of my favorites is Risking Everything, edited by Roger Housden. If you really hate poetry, try reading some Dr. Seuss or Shel Silverstein! You can also look to song lyrics, which have been a great source of inspiration for me. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the General category, check our popular posts, or choose a related post below:60 Synonyms for â€Å"Walk†"Confused With" and "Confused About"Passed vs Past

HOSPITALITY AND HOTELS IN THE UK INDUSTRY COURSEWORK

HOSPITALITY AND HOTELS IN THE UK INDUSTRY - Coursework Example ort about the Hospitality and Hotel Industry of the United Kingdom we will discuss the position of the hotel industry today, and how it has emerged from a depression. We will also discuss the ongoing trends, economic factors and other external factors that will affect the hotel industry. Moreover, the report establishes link between hospitality sector and other sectors of the UK economy like travel, tourism and leisure. It has been unveiled that the hotel owners in the United Kingdom are coming out of an approximately three year long economic depression, their revenue had declined significantly. The numbers of occupancies and the room rates have now increased according to the PwC. The four star brand hotels have increased as cutting down in budgets have forced the traveller who is conscious about its travelling cost live in low cost hotels, this has increased competition in the United Kingdom hotel industry due to an increase in the supply of hotels. According to PwC the number of occupancies in the region is estimated to rise to 71 percent, this level was last seen in 2007 and 2008. The rates will be best since 2009; the average daily rates this year might be up to  £60. The main standard for the hotel industry regarding the revenue per available room will increase by 1.8 per cent next year to  £43.44, this is not as good when compared to inflation however it shows some sign on stability in the hotel industry. There are 12,600 hotels in the United Kingdom with 633,000 rooms total; further 20,000 rooms are expected to open in about 200 hotels in 2013 and 2014. In the market for four star hotels there are many developments going on for example Starwood Hotels Aloft which is opening in Liverpool. (Blitz, 2013) The hospitality industry does not merely comprises of hotels and resturants but there are varies range of services and organizations types included in this industry. There are mainly 12 different sectors of this industry. All of these sector offer wide

Forensic Nursing Research Paper Example | Topics and Well Written Essays - 1250 words

Forensic Nursing - Research Paper Example The students learned while on job, mostly in healthcare facilities through observation and knowledge acquisition from experienced nurses (Burgess, Berger & Boersma, 2004). The fundamental nursing program of study focuses on firm psychological and physical science base. This essential base comprises human anatomy and physiology, behavioral sciences, biology, nursing arts, theory and general humanities. In the late 20hcentury, nursing ac a course became integral in a majority of universities. This immense advancement is attributable to demands of consumers as well as the more expansive roles for nursing. Nursing practice has undergone metamorphosis with the objective of meeting the needs of the society and the shifting clients’ needs. Conventionally, nurses have been trained as generalists and nurses with immense experience in clinical settings in specific areas are considered to be specialists. A specialty or occupation involving specialty calls for a body of practical applicat ion and theoretical knowledge. These undertakings have to be of highly specialized nature. Furthermore, a specialty area is often depicted to have a legally approved certification course which assesses the achievement of set standards. Additionally, specialty can be defined as a particular area of functional and clinical nursing with a fine, comprehensive focus for safe delivery of wide range of services in that specific nursing area. Early 1980s were a hallmark of a wide range of informal and formal nursing specialty programmes in nursing. Among pioneer specialties in nursing included areas of perinatal care, oncology and gerontology. The acknowledgment of a specialist field of practice is significantly increased with the training tracks which enhance the specialization (Lynch, 2007). Towards the end of the 20th century, it was a testament that a pioneering shift towards forensic nursing education was occurring globally at the levels of diploma, undergraduate and post-graduate. Dev elopment in this nursing specialty area was however slow compared to the already well established areas like gerontology and critical nurse care. Consequently, the educational advancement of forensic nursing was probably hampered by the need to first of all have a specialty accreditation. Forensic nursing is comprised of numerous subspecialties. In all these subcategories, the principal nursing practice is to offer care for offenders and victims both living and deceased. Such clinical care is interfaced with a legal perspective. Nurses who practice forensic application in their delivery of services are entangled to other disciplines hence it can be termed as a multidisciplinary specialty area. Such an interface allows forensic nurses to navigate systems such as child welfare system and criminal justice. Additionally, forensic nurses are linked to systems of medical examiner or coroner as well as the mental healthcare system all of which depend on provision of nursing services. Each subspecialty of forensic nursing has its own unique history and role in clinical practice development. Such factors have been influenced by societal needs reforms within healthcare settings and prisons as well as public sensitivity (Sekula, Colbert, Zoucha, Amar & Williams, 2012). An elaborate literature review in the field of forensic nursing identifies the following subspecialties in the nursing field; Forensic correctional or psychiatric nursing, sex

Jordans back :: essays research papers

College athletics have always been one of American's favorite pastimes. We as Americans love the thrill of hard competition. College athletics have always been at the heart of this competitive rush. They have always been something more pure than professional athletics, more than just the money. In recent years, college athletics have changed for the worse. Players have drifted away from what it used to mean to play college sports. They have fallen into illegal activities and have left fans disappointed. One of the reasons for this change is the lack of funds for the players. There are many benefits to paying college athletes. In many cases, athletes who go to school on scholarships are treated differently than academic scholarship recipients. The N.C.A.A. should not have jurisdiction over a player’s earnings outside his sports participation. The rules need to be looked at and changed. Even if each and every one of its ruler-to-the-wrist regulations was written for a sound reason, the collective impact is that the NCAA’s treatment of the student-athlete has become unnecessarily punitive and hopelessly out-of-date (McCallum, 1996). One of the biggest complaints lately from college basketball fans is that too many athletes are leaving college early to enter the draft. Some athletes are even going directly from high school to the NBA and skipping college altogether. A record number of athletes who were still eligible to play college ball entered the National Basketball Association draft. There are also plans for two new professional leagues for teen-agers, which threaten to diminish the talent pool for college teams (Blum, 1996). This upsets college fans because they don't get to see the best guys play for their school. The nation’s top high-school player, Kobe Bryant, was one of a few high school seniors who declared themselves eligible for the draft (Blum, 1996). Fans like to get to know a team and support it but at the same time, become frustrated because of players leaving. Officials of big-time basketball programs are taking a new look at their sport, arguably the NCAA, the most popular and lucrative, because of worries that it can no longer hang on to or even attract the game's biggest stars (Blum, 1996). The biggest and most obvious reason for basketball players to skip out on college and to enter into the draft is because of the big money. Many players come from poor families and run down neighborhoods.

Chapter 21 Lease Answer Problems

CHAPTER 21 ACCOUNTING FOR LEASES CONTENT ANALYSIS OF EXERCISES AND PROBLEMS Time Range (minutes) 5-10 Number E21-1 Content Operating Lease. (Easy) Annual rental payments, no renewable option clause, executory costs. Lessee's journal entries to record agreement, payments, expenses. Capital Lease. (Moderate) Calculation of rental payments made at end of year. Table summarizing lease payments, interest expense. Journal entries. IFRS differences. Capital Lease. (Moderate) Payments made at beginning of year. Table summarizing lease payments, interest expense. Journal entries.Direct Financing Lease. (Moderate) Calculation of rental receipts, made at end of year. Table summarizing rental receipts, interest revenue. Journal entries. Direct Financing Lease. (Easy) Journal entries to record contract, first rental receipt. Direct Financing Lease / Capital Lease. (Moderate) Table summarizing lease and interest payments. Journal entries for lessor and lessee. Sales-Type Lease. (Moderate) Payments made at end of year. Calculation of selling price (fair value). Table summarizing lease receipts, interest revenue. Journal entries. Sales-Type Lease. Moderate) Payments made at beginning of year. Calculation of selling price (fair value). Table summarizing lease receipts, interest revenue. Journal entries. Sales-Type Lease / Capital Lease. (Moderate) Computation of lease payments. Journal entries for lessor and lessee. Operating Lease / Sales-Type Lease. (Moderate) Accounted for as operating, should have been sales-type. Computation of effect on net income. Operating Lease. (Easy) Computation of income derived from lease by lessor, amount of rent expense for lessee. E21-2 15-25 E21-3 10-15 E21-4 10-15 E21-5 E21-6 5-10 10-15E21-7 10-15 E21-8 10-15 E21-9 E21-10 10-15 10-20 E21-11 10-15 21-1 Number E21-12 Content Determining Type of Lease. (Moderate) Title passes at leaseend, collectibility reasonably assured, no uncertainties surrounding costs to be incurred. Table summarizing recei pts, revenue. Lessor's journal entries. Guaranteed and Unguaranteed Residual Values. (Moderate) Calculate residual value. Determine classification of the lease depending on the type of residual value. (Appendix). Sales-Leaseback. (Easy) Calculation of lease payments. Lessor's journal entries to record sale and agreement.Description of how to treat the gain by the lessee. Determining Type of Lease. (Moderate) No bargain purchase option, no agreement to transfer ownership at lease-end, no uncertainties surrounding costs to be incurred. Journal entries for lessee and lessor. Guaranteed residual value. Determining Type of Lease. (Moderate) Lessor's viewpoint. Option to buy, collectibility reasonably assured, no uncertainties surrounding costs. Journal entries, disclosure requirements. Capital Lease. (Moderate) Calculation of rental payments. Table summarizing lease payments, interest expense.Journal entries, partial balance sheet. IFRS differences. Direct Financing Lease. (Challenging) Table summarizing lease receipts, interest revenue. Explanation of lease classification. Journal entries. Partial balance sheets. Comprehensive: Direct Financing and Capital Lease. (Challenging) Computation of rental amounts. Table summarizing lease and interest receipts. Analysis of lessee's lease classification. Journal entries for lessor and lessee. Comparative financial statement presentation. Direct Financing Lease. (Moderate) Unguaranteed residual value. Computation of rental amounts.Table summarizing lease and interest receipts. Journal entries. Sales-Type Lease. (Challenging) Calculation of implied selling price. Table summarizing lease receipts, interest revenue. Explanation of lease classification. Journal entries, partial balance sheet. Various Lease Issues. (Challenging) Journal entries for lessee and lessor to record all lease transactions. Various Lease Issues. (Challenging) Computation of annual rentals if payable at beginning of year, at end of year. Table. Journal e ntries for lessee and lessor. Partial balance sheet disclosures. 21-2Time Range (minutes) 15-20 E21-13 15-25 E21-14 15-20 P21-1 30-40 P21-2 25-35 P21-3 30-50 P21-4 35-50 P21-5 45-60 P21-6 30-40 P21-7 30-45 P21-8 P21-9 30-45 45-60 Number P21-10 Content Initial Direct Costs. (Moderate) Analysis for various lease classifications. Determination of lessor's lease classification. Discussion of lessor's journal entries. Various Lease Issues. (Challenging) Classification of lease for lessee, for lessor. Option to buy, collectibility reasonably assured, no uncertainties. Lessor journal entries. Accounting for a change in residual value. Accounting for Leases. Challenging) Journal entries to record the lease for both the lessee and lessor. (AICPA adapted). Lessor's Income Statement. (Challenging) Preparation of lessor's income statement, including sales-type and operating lease as well as long-term construction contracts. (Appendix). Determining Types of Leases. (Moderate) For lessee, for les sor. Lease of land. No bargain purchase option, collectibility reasonably assured, no uncertainties surrounding costs. (Appendix). Sales-Leaseback. (Moderate) Classification of lease by lessee. Journal entries for both lessee and lessor. Time Range (minutes) 20-30P21-11 30-45 P21-12 P21-13 30-45 50-60 P21-14 10-20 P21-15 20-30 ANSWERS TO QUESTIONS Q21-1 Q21-2 GAAP provides a common set of criteria for determining the classification of leases by both the lessee and the lessor. The advantages of leasing for the lessee include: 1. Financing benefits: a. b. c. The lease provides 100% financing so that the lessee acquires the asset without having to make a down payment. The lease contract may contain fewer restrictive provisions for financing. The leasing arrangement creates a claim that is against only the leased equipment and not against all assets. 2.Risk benefit: The lease may reduce the risk of obsolescence for the lessee. 3. Tax benefit: For income tax purposes, the lessee, through deduction of the lease payment, can write off the full cost of an asset. 4. Financial reporting benefit: For operating leases, the lease does not add an asset or a liability to the lessee's balance sheet. 5. Billing benefit: For certain contract-type work, leasing may permit higher charges because interest on borrowed money to purchase assets is not usually allowed as a contract charge, whereas the interest element contained in the rental payments is allowed as a contract charge. 1-3 Q21-3 By structuring the terms of the lease so that it qualifies as an operating lease, the lessee avoids having to include the asset and the liability in the balance sheet. Exclusion of these items creates more favorable financial ratios, such as rate of return on investment, the current ratio, and the ratio of debt to equity. This, in turn, may increase the borrowing capacity of the lessee. The lessee is practicing â€Å"off balance sheet financing. † A capital lease, on the other hand, would appear in the financial statements and affect financial ratios.It may impede lessee borrowing efforts. a. A lease is â€Å"an agreement conveying the right to use property, plant, or equipment (land and/or depreciable assets), usually for a stated period of time. † b. A sales-type lease for the lessor is a lease that meets any one of the Column A criteria and both of the Column B criteria in Exhibit 20-2, and results in a manufacturer's or dealer's profit. c. A direct financing lease for the lessor is a lease that meets any one of the Column A criteria and both of the Column B criteria, and does not result in a manufacturer's or dealer's profit. d.A sale-leaseback transaction is a lease transaction in which the owner of an asset sells it, and then immediately leases it back from the buyer. e. An operating lease for the lessee is a lease that meets none of the Column A criteria. For the lessor, it is a lease that meets none of the Column A criteria, and fails at least one of t he Column B criteria. f. A leveraged lease is a three-party lease in which one party (the equity participant) buys or manufactures an asset and leases it to another party (the asset user), with a third party (the debt participant) providing nonrecourse financing for the transaction.Q21-4 Q21-5 a. Inception of lease is the date of the lease agreement; or, if the leased property is being constructed, the date that the title passes to the lessor. b. Bargain purchase option is a provision allowing the lessee to purchase the leased property at the end of the life of the lease at a price so favorable that the exercise of the option appears, at the inception of the lease, to be reasonably assured. c. Unguaranteed residual value is the portion of the estimated residual value of the leased property that is not guaranteed by the lessee or by a third party unrelated to the lessor. . Implicit interest rate is the interest (discount) rate that, when applied on a present value basis to the sum of the minimum lease payments and any unguaranteed residual value accruing to the lessor, causes the resulting present value to be equal to the net investment of the leased property to the lessor. 21-4 Q21-5 (continued) e. Initial direct costs are costs incurred by the lessor to originate a lease that (1) result directly from acquiring that lease and (2) would not have been incurred had that leasing transaction not occurred.They also include costs directly related to specified activities performed by the lessor for that lease, such as evaluating the lessee's financial condition, negotiating lease terms, preparing and processing lease documents, and closing the transaction. Q21-6 If there is a bargain purchase option, the components of the minimum lease payments are: (1) the minimum periodic rental payment required by the lease over the lease term, and (2) the payment required by the bargain purchase option.Otherwise, they include (1) the minimum periodic rental payments plus (2) any g uarantee by the lessee of the residual value, and (3) any payments upon failure to renew or extend the lease. The criteria for a capital lease are: 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Lease term is 75% or more of the estimated economic life of the asset 4. Present value of minimum lease payments is 90% or more of fair value of the leased property to the lessor One (or more) of these criteria must be met for the lessee to classify a lease as a capital lease.Q21-8 Under an operating lease, the lessee records each rental payment as rent expense; no amount is capitalized. The lessor records each rental receipt as rent revenue. The leased asset is retained on the lessor's books and is depreciated by the lessor. Under a capital lease, the lessee records the present value of the minimum lease payments as both an asset and a liability. The lessee recognizes a portion of each payment as interest expense to produce a constant rate of interest on the book val ue at the beginning of the period, and recognizes the remainder of the payment as a reduction of the lease obligation.The lessee depreciates the asset over the term of the lease, unless there is a bargain purchase option or transfer of ownership at the end of the lease, in which case the depreciation period is the economic life of the asset. The two additional criteria for a sales-type lease are: 1. Collectibility of the minimum lease payments is reasonably assured. 2. No important uncertainties surround the amount of unreimbursable costs yet to be incurred by the lessor under the lease. In addition, the lease must result in a manufacturer's or dealer's profit or loss.Q21-7 Q21-9 Q21-10 21-5 Q21-11 The basic difference in accounting for a sales-type lease is that the carrying value of the asset is charged to cost of asset leased (expense), and the present value of the minimum lease payments is recorded as the amount of the sale. In a direct financing lease, no sales or expense is re cognized. Instead, the asset is removed from the books and the difference between its carrying value and the undiscounted minimum lease payments is recorded as unearned interest revenue.The net investment in a sales type lease is accounted for in a similar manner to that for a direct financing lease. The FASB states that the interest revenue from a lease is recognized so as to yield a constant return on net investment. Compound interest techniques can be used to compute this return if the following are known: (a) the amount of the lease payment, (b) the cost or fair value of the lease, and (c) the number of periods of the lease. Multiplying the interest rate by the amount of the net investment at the beginning of the year results in a constant return on investment.Q21-12 Q21-13 Q21-14 Owens Company records the lease as a capital lease due to the bargain purchase option, and depreciates the asset over its estimated economic life. The original lease was a capital lease and McFarland C ompany is relieved of its obligation. McFarland removes the equipment from its books, and recognizes the gain when the new lease transaction takes place, that is, during the current year. a. Lessee's disclosure: 1. For all leases, a general description of the leasing arrangement 2.For operating leases having lease terms in excess of one year: (a) Future minimum rental payments required as of the date of the latest balance sheet presented, for each of the 5 succeeding fiscal years and in total The total of minimum rentals to be received in the future under noncancellable subleases Q21-15 (b) 3. For all operating leases, rental expense for each period 4. For capital leases: (a) (b) The gross amount of assets recorded under capital leases by major classes according to nature or function Future minimum lease payments for each of the 5 succeeding fiscal years and in total 21-6 Q21-15 (continued) a. 4. continued) (c) (d) The total of minimum sublease rentals to be received in the future u nder noncancellable subleases Assets, accumulated depreciation, depreciation expense, and liabilities b. Lessor's disclosure: 1. A general description of all leasing arrangements 2. For operating leases: (a) The cost and carrying amount, if different, of property on lease or held for leasing by major classes of property, and the amount of the total accumulated depreciation Minimum future rentals on noncancellable leases for each of the 5 succeeding fiscal years and in total Total contingent rentals included in income for each period b) (c) 3. For direct financing and sales-type leases: (a) The components of the net investment in direct financing and sales-type leases including: (1) (2) (3) (4) (b) (c) Q21-16 Q21-17 The future minimum lease payments to be received Including any profit thereon The unguaranteed residual values accruing to the benefit of the lessor For direct financing leases only, initial direct costs Unearned income Future minimum lease payments to be received for eac h of the 5 succeeding fiscal years Total contingent rentals included in income for each periodIFRS classify leases as either finance leases or operating leases. A finance lease is equivalent to a capital lease under U. S. GAAP. In general, IFRS provide a series of indicators that, individually or in combination, normally lead a lease to be classified as a finance lease. U. S. GAAP contains a series of four criteria which, if any one is met, will result in the classification of a lease as a capital lease. While these indicators and criteria are similar, the IFRS indicators are less detailed and require more judgment in classifying leases. Specifically, both IFRS and U.S. GAAP treat leases that transfer title from the lessor to the lessee and leases that contain bargain purchase options as finance (capital) leases. However, if an asset is leased for the major part of an asset’s economic life, IFRS consider this an indicator of a finance lease. IFRS do not define what is meant b y â€Å"substantially all† of the asset’s fair value while U. S. GAAP sets a 90% threshold. 21-7 Q21-18 The primary accounting issue in accounting for a sales-leaseback transaction from the seller-lessee's viewpoint is the recognition of a profit or a loss on the sale.Any profit or loss is deferred and amortized in proportion to the amortization of the leased asset, if a capital lease, or in proportion to the rental payments, if an operating lease. If the fair value of the property is less than its undepreciated cost at the time of the transaction, a loss is recognized immediately on the difference between the undepreciated cost and the fair value. The fact that there are three or four parties (equity participant, asset user, debt participant, and also a manufacturer if the equity participant does not make the product) distinguishes a leveraged lease from other leases.For the lessee there are no new accounting issues. The lessee classifies and accounts for the lease as for a nonleveraged lease. Q21-19 ANSWERS TO MULTIPLE CHOICE 1. 2. a b 3. 4. d b 5. 6. a c 7. 8. b c 9. 10. a d 21-8 SOLUTIONS TO REVIEW EXERCISES RE21-1 1. 2. 3. 4. Classification Criteria Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of minimum lease payments is 90% or more of fair value Criteria Met? No No No No It is 40% (8 ? 20 years) It is 50% ($50,000 ? $100,000) Remarks Therefore, this lease is an operating lease.It does not meet any of the criteria. RE21-2 Rent Expense Cash 10,000 10,000 RE21-3 1. 2. 3. 4. Classification Criteria Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of minimum lease payments is 90% or more of fair value Criteria Met? No No No Yes It is 71% (5 ? 7 years) It is 100% ($250,000 ? $250,000) Remarks Therefore, this lease is a capital lease. It meets one of the four criteria. RE21-4 Jan, 1 Leased Equipment Capit al Lease Obligation Dec. 31 Interest Expense (10% x $250,000) Capital Lease Obligation ($65,949. 7 – $25,000) Cash 250,000. 00 250,000. 00 25,000. 00 40,949. 37 65,949. 37 21-9 RE21-4 (continued) Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 50,000. 00* 50,000. 00 *The lessee depreciates the asset using the straight-line method over the lease term because there is no transfer of ownership or bargain purchase option, resulting in annual depreciation of $50,000 ($250,000 ? 5). RE21-5 Jan, 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Dec. 31 Interest Expense Accrued Interest on Capital Lease Obligation *($275,000 – $65,949. 37) x 0. 0 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 55,000. 00* 55,000. 00 275,000. 00 65,949. 37 275,000. 00 65,949. 57 20,905. 06* 20,905. 06 *The lessee depreciates the asset using the straight-line method over the lease term because there is no transfer of ownership or bargain purchase option, resulting in annual depreciation of $55,000 ($275,000 ? 5). RE21-6 PV of lease payments = $25,000 x 6. 710081 = PV of single sum of $4,000 = $4,000 x 0. 463193 = Present value of minimum lease payments RE21-7 PV of lease payments = $25,000 x 6. 710081 = PV of single sum of $20,000 = $20,000 x 0. 63193 = Present value of minimum lease payments RE21-8 (a) (b) (c) Sales-type lease Direct financing lease Operating lease $167,752 9,264 $177,016 $167,752 1,853 $169,605 21-10 RE21-9 Jan, 1 Lease Receivable ($65,949. 37 x 5) Equipment Unearned Interest: Leases Dec. 31 Cash Lease Receivable Unearned Interest: Leases (0. 10 x $250,000) Interest Revenue: Leases *($329,746. 85 – $79,746. 85) x 0. 10 RE21-10 Jan, 1 Lease Receivable Sales Revenue Unearned Interest: Leases Cost of Asset Leased Merchandise Inventory (or Equipment Held for Lease) Dec. 31 Cash Lease Receivable Unearned Interest: Leases (0. 0 x $250,000) Interest Revenue: Lease s *($329,746. 85 – $79,746. 85) x 0. 10 329,746. 85 329,746. 85 250,000. 00 79,746. 85 65,949. 37 25,000. 00 65,949. 37 25,000. 00* 250,000. 00 79,746. 85 200,000. 00 200,000. 00 65,949. 37 25,000. 00 65,949. 37 25,000. 00* 21-11 SOLUTIONS TO EXERCISES Note to Instructor: Although students may use their calculators or software to make the various present value calculations, any present value calculations in the following solutions to exercises and problems are based on the factors from the appropriate tables in the TVM Module of the book. E21-1 Criteria 1. . 3. 4. Transfer of ownership at end of lease Bargain purchase option 1. Determination of Lease Classification Met No No No Remarks Reverts to lessor Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value 20% ( 10 year lease life ) 50 year economic life) No PV is $485,098. 79* or 24% of the fair value *PV = (Annual lease payment – Annual executory costs) x PV factor fo r 10 payments at 14% = ($100,000 – $7,000) x 5. 216116 = $485,098. 79 The lease is an operating lease, since none of the above criteria are met. 2. 2010 Dec. 2011 Dec. E21-2 1. . 31 Rent Expense Cash Rent Expense Cash 100,000 100,000 31 100,000 100,000 1. Determination of Lease Classification Criteria Transfer of ownership at end of lease Bargain purchase option Met No No Remarks 21-12 E21-2 (continued) 3. 4. Criteria Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value Met Yes Remarks 100% Yes 100% The lease is a capital lease, since at least one of the Column A criteria is met. 2. Present value = Lease payments x PV factor for 5 payments at 12% (asset and liab) = $83,222. 92 x 3. 604776 = $300,000 (rounded) 3. 1) Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 aColumn Summary of Lease Payments and Interest Expense for the Sax Company (2) Lease Payment Required $ 83,222. 92 83,222. 92 83,222. 92 83,222. 92 83,222. 92 (3) (4) (5) Interest Expense Reduction at 12% on of Lease Balance of Obligation Balancea Obligationb Obligationc $300,000. 00 $36,000. 00 $47,222. 92 252,777. 08 30,333. 25 52,889. 67 199,887. 41 23,986. 49 59,236. 43 140,650. 98 16,878. 12 66,344. 80 74,306. 18 8,916. 74 74,306. 18 -0- 5 at beginning of year x 12%. – Column 3. alance – Column 4. 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Interest Expense (12% x $300,000) Cash 300,000 47,222. 92 36,000. 00 b$83,222. 92 cPrevious 4. 2010 Jan. Dec. 300,000 31 83,222. 92 21-13 E21-2 (continued) 4. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000. 00 ? 5) Capital Lease Obligation Interest Expense (12% x $252,777. 08) Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 60,000 60,000 52,889. 67 30,333. 25 2011 Dec. 31 83,222. 92 31 60,000 60,000 5. Under U. S.GAAP, the Sax Company would classify the lease as an operating lease. The lease does not meet either of the first two criteria. The third criterion is not met since the 3-year lease life is 60% of the economic life of 5 years. The fourth criterion is also not met since the present value of the lease payments of $264,201 ($110,000 x 2. 401831) is 88. 1% of the fair value of $300,000. Therefore, the lease would be an operating lease. Under IFRS, the Sax Company would have to exercise judgment but it is likely that it would classify the lease as a â€Å"finance† lease since two of the indicators would probably be considered to be met.The present value of 88. 1% is probably â€Å"substantially all† of the fair value of the asset. Also, it could be argued that 60% is the †major part† of the economic life of the asset. E21-3 1. Application of Criteria for Determination of Lease Classification from Lessee's Viewpoint Group I Criteria 1. 2. 3. 4. Transfe r of ownership Bargain purchase option Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value* Met No No Yes 100% Remarks Yes 100% = $20,000 x PV factor for 4 payments in advance at 12% = $20,000 x 3. 401831 = $68,036. 62 21-14 *PV of minimum lease paymentsE21-3 (continued) 1. (continued) Since the lease meets at least one of the Column A criteria, it is a capital lease. 2. (1) Summary of Lease Payments and Interest Expense for the Adden Company (2) (3) (4) Balance of Capital Lease Obligation $68,036. 62 48,036. 62a 53,801. 01c 33,801. 01 37,857. 13 17,857. 13 20,000. 00 0 Date January 1, 2010 January 1, 2010 December 31, 2010 January 1, 2011 December 31, 2011 January 1, 2012 December 31, 2012 January 1, 2013 a$68,036. 62 b$48,036. 62 c$48,036. 62 dAdjusted Interest at 12% Annual Lease on Unpaid Payment Obligation Before the initial payment $20,000. 00 0 0 $5,764. 9b 0 20,000. 00 4,056. 12 0 0 20,000. 00 2,142. 87d 0 0 20,000. 00 â₠¬â€œ $20,000 x 12% + $5,764. 39 for $0. 01 rounding error 1 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Interest Expense Accrued Interest on Capital Lease Obligation Insurance Expense Property Tax Expense Cash 68,036. 62 20,000 5,764. 39 5,764. 39 1,500 6,000 3. 2010 Jan. 68,036. 62 20,000 Dec. 31 31 7,500 21-15 E21-3 (continued) 3. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($68,036. 62 ? 4) Accrued Interest on Capital Lease Obligation Capital Lease Obligation CashInterest Expense Accrued Interest on Capital Lease Obligation Insurance Expense Property Tax Expense Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 17,009. 16 17,009. 16 2011 Jan. 1 5,764. 39 14,235. 61 4,056. 12 20,000. 00 Dec. 31 4,056. 12 1,300 5,500 31 6,800 31 17,009. 16 17,009. 16 E21-4 1. Rental receipt = = Fair value of assets PV factor for 8 receipts at 14% $500,000 4. 638864 = $107,785 . 01 21-16 E21-4 (continued) 2. Summary of Lease Payments Received and Interest Revenue Earned by the Rexon Company (1) (2) Annual Lease Payment Received $107,785. 01 107,785. 01 107,785. 01 107,785. 1 107,785. 01 107,785. 01 107,785. 01 107,785. 01 (3) Interest Revenue at 14% on Net Investment $70,000. 00a 64,710. 10 58,679. 61 51,804. 86 43,967. 63 35,033. 20 24,847. 95 13,236. 73f (4) Amount of Net Investment Recovered $37,785. 01b 43,074. 91 49,105. 40 55,980. 15 63,817. 38 72,751. 81 82,937. 06 94,548. 28 (5) Lease Receivable $862,280. 08 754,495. 07c 646,710. 06 538,925. 05 431,140. 04 323,355. 03 215,570. 02 107,785. 01 -0(6) Unearned Interest: Leases $362,280. 08 292,280. 08d 227,569. 98 168,890. 37 117,085. 51 73,117. 88 38,084. 68 13,236. 73 -0(7) Net Investment $500,000. 00 462,214. 99e 419,140. 08 370,034. 8 314,054. 53 250,237. 15 177,485. 34 94,548. 28 -0- Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 Dec ember 31, 2015 December 31, 2016 December 31, 2017 a$500,000 21-17 x 14% – $70,000. 00 – $107,785. 01 – $70,000. 00 b$107,785. 01 c$862,280. 08 d$362,280. 08 e$500,000 fAdjusted – $37,785. 01 for $0. 03 rounding error 21-17 E21-4 (continued) 3. 2010 Jan. 1 Lease Receivable Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 862,280. 8 500,000. 00 362,280. 08 107,785. 01 70,000 Dec. 31 31 107,785. 01 70,000 2011 Dec. 31 31 107,785. 01 64,710. 10 107,785. 01 64,710. 10 E21-5 Proof that the yield is 1%: PVn=48, i=1% is not given in text; it is 37. 973959; thus PV of lease payments received = Monthly lease payment x PV factor for 48 receipts at 1% = $1,600 x 37. 973959 = $60,758 (This is not required for the problem) 2010 Jan. 2 Lease Receivable Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Int erest Revenue: Leases [1% x ($76,800 – $16,042)], (rounded) 76,800 0,758 16,042 1,600 31 1,600 31 608 608 21-18 E21-6 1. Annual lease payment = Cost of the equipmet PV factor for 5 years in advance at 14% = $30,000 3. 913712 = $7,665. 36 Summary Table (1) Lessee Company (2) Lease Payment Required Lease Rental Collected (3) Interest at 14% on Unpaid Obligation Interest at 14% on Net Investment (4) Balance of Lease Obligation Net Investmenta Lessor Company Date January 1, 2010 January 1, 2010 $7,665. 36 December 31, 2010 0 January 1, 2011 7,665. 36 December 31, 2011 0 January 1, 2012 7,665. 36 December 31, 2012 0 January 1, 2013 7,665. 6 December 31, 2013 0 January 1, 2014 7,665. 36 aPrevious balance – Column 2 + Column 3 b$22,334. 64 cAdjusted 0 $3,126. 85b 0 2,491. 46 0 1,767. 11 0 941. 38c 0 $30,000. 00 22,334. 64 25,461. 49 17,796. 13 20,287. 59 12,622. 23 14,389. 34 6,723. 98 7,665. 36 0 x 14% for $0. 02 rounding error 21-19 E21-6 (continued) Date 01/01/10 12/31/10 12/31/11 12/31/12 12/31/13 1$7,665. 36 Lease Receivable $38,326. 801 30,661. 44 22,996. 08 15,330. 72 7,665. 36 x5 – $30,000. 00 – $3,126. 85 – Unearned Net = Interest: Leases Investment $8,326. 802 5,199. 953 2,708. 49 941. 38 0 $30,000. 00 25,461. 9 20,287. 59 14,389. 34 7,665. 36 2$38,326. 80 3$8,326. 80 2. Lessor Leasing Company: 2010 Jan. 1 Lease Receivable ($7,665. 36 x 5) Equipment Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 38,326. 80 30,000. 00 8,326. 80 7,665. 36 3,126. 85 1 Dec. 31 7,665. 36 3,126. 85 Lessee Company: 2010 Jan. 1 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash 30,000 7,665. 36 30,000 7,665. 36 21-20 E21-6 (continued) 2. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($30,000 ? ) Interest Expense Accrued Interest on Capital Lease Obligation Executory Costs (Expenses) Cash 6,000 6,000 3,126. 85 3,126. 85 500 500 31 31 E21-7 1. Selling price (fair value and the net investment) = $50,000 (PVn = 4, i = 12%) = $50,000 x 3. 037349 = $151,867. 45 2. Summary of lease receipts and interest revenue: Information needed to prepare table: Gross investment = Annual lease payment received x Number of payments = $50,000 x 4 = $200,000 Initial PV of the investment: PV of lease payments (see 1) = $151,867. 45 Unearned interest revenue = Gross investment – Initial PV of investment = $200,000 – $151,867. 5 = $48,132. 55 = $151,867. 45 = $130,000. 00 Sales price = PV of minimum lease payments Cost of asset leased = Cost of equipment 21-21 E21-7 (continued) 2. (continued) Gross profit = Sales price – Cost of asset leased = $151,867. 45 – $130,000. 00 = $21,867. 45 (Table follows Requirement 3) 3. 2010 Jan. 1 Lease Receivable Sales Unearned Interest: Leases Cost of Asset Leased Equipment Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Recei vable Unearned Interest: Leases Interest Revenue: Leases 200,000. 00 151,867. 45 48,132. 55 130,000. 00 50,000 18,224. 09 1 Dec. 31 31 2011 Dec. 30,000. 00 50,000 18,224. 09 31 31 50,000 14,410. 98 50,000 14,410. 98 21-22 E21-7 (continued) 2. Summary of Lease Payments Received and Interest Revenue Earned by the Berne Company (1) (2) Annual Lease Payment Received $50,000 50,000 50,000 50,000 (3) Interest Revenue at 12% on Net Investment $18,224. 09a 14,410. 98 10,140. 30 5,357. 18f (4) Amount of Net Investment Recovered $31,775. 91b 35,589. 02 39,859. 70 44,642. 82 (5) Lease Receivable $200,000 150,000c 100,000 50,000 -0(6) Unearned Interest: Leases $48,132. 55 29,908. 46d 15,497. 48 5,357. 18 -0(7) Net Investment $151,867. 45 120,091. 54e 84,502. 52 44,642. 2 -0- Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 a$151,867. 45 b$50,000 21-23 x 0. 12 – $18,224. 09 – $50,000 – $18,224. 09 – $31,775. 91 c$200,000 d$4 8,132. 55 e$151,867. 45 fAdjusted for $0. 04 rounding error 21-23 E21-8 1. Selling price (fair value) = $100,000 (PV in advance) n = 5, i = 14% = $100,000 (3. 913712) = $391,371. 20 2. Summary of lease payments received and interest revenue: Information needed to prepare table: Gross investment 20-24 = = = (Annual lease payment received x Number of payments) + Unguaranteed residual value ($100,000 x 5) + $20,000 $520,000Initial present value of the investment: PV of lease payments (see part 1) PV of unguaranteed residual value: $20,000 x PV of a single sum for 5 years at 14%: $20,000 x 0. 519369 Total initial PV (this is also the net investment) Unearned interest: leases $391,371. 20 10,387. 38 $401,758. 58 = Gross investment – Initial PV of the investment = $520,000. 00 – $401,758. 58 = $118,241. 42 Sales price = = Present value of lease payments $391,371. 20 (see part 1) = Cost of asset – PV of the unguaranteed residual value = $313,000. 00 – $10,387. 3 8 = $302,612. 62 Cost of asset leased 21-24 E21-8 (continued) 2. continued) Gross profit = = = Sales price – Cost of asset leased $391,371. 20 – $302,612. 62 $ 88,758. 58 Summary of Lease Payments Received and Interest Revenue Earned by the Edom Company (1) (2) Annual Lease Payments Received $100,000. 00 100,000. 00 100,000. 00 100,000. 00 100,000. 00 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $520,000. 00a 420,000. 00 320,000. 00 220,000. 00 120,000. 00 20,000. 00 (5) Unearned Interest: Leases $118,241. 42b 75,995. 22 41,834. 55 16,891. 39 2,456. 18 0 (6) Net Investment $401,758. 58 301,758. 58 344,004. 78d 244,004. 78 278,165. 45 178,165. 45 203,108. 61 103,108. 61 117,543. 2 17,543. 82 20,000. 00f Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 Jan. 1, 2012 Dec. 31, 2012 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2014 Dec. 31, 2014 a($100,000 b$520,000 $42,246. 20c 34,160. 67 24,943. 16 14,435. 21 2,456. 18e x 5) + $20,000 x 1 4% + $42,246. 20, or $420,000 – $75,995. 22 residual value Lease Receivable Cost of Asset Leased Sales Equipment (or Inventory) Unearned Interest: Leases 520,000. 00 302,612. 62 – $401,758. 58 c$301,758. 58 d$301,758. 58 eAdjusted for $0. 05 rounding error fUnguaranteed 3. 2010 Jan. 1 391,371. 20 313,000. 00 118,241. 42 21-25 E21-8 (continued) 3. (continued) Jan. Dec. 011 Jan. Dec. E21-9 Summary Table for First 3 Months (1) Bullard Company: Month Anson Company: Month Beginning of 1 Beginning of 1 End of 1 Beginning of 2 End of 2 Beginning of 3 End of 3 (2) Lease Payment Required (3) Interest Expense (4) Balance of Lease Obligation 1 31 Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 100,000 42,246. 20 100,000 42,246. 20 1 31 100,000 34,160. 67 100,000 34,160. 67 Lease Receipt $2,000 0 2,000 0 2,000 0 Interest Revenue 0 $588b 0 574 0 560 Net Investmenta $60,817 58,817 59,40 5c 57,405 57,979 55,979 56,539 1-26 E21-9 (continued) Receivable $70,0001 68,000 66,000 64,000 1($2,000 2$58,817 b1% aLease – Unearned = Interest: Leases $9,183 8,595 8,021 7,461 Net Investment $60,8172 59,405 57,979 56,539 x 35) + $2,000 + $588 Lease Receivable Sales ($58,817 + $2,000) Unearned Interest: Leases ($72,000 – $60,817) Cost of Asset Leased Merchandise Inventory 72,000 60,817 11,183 50,000 2,000 588 2,000 574 2,000 560 50,000 2,000 588 2,000 574 2,000 560 x $58,817 c$58,817 1. At inception Initial receipt At end of 1st month Cash Lease Receivable Unearned Interest: Leases Interest Revenue: LeasesSecond Cash Installment Lease Receivable At end of Unearned Interest: Leases 2nd month Interest Revenue: Leases Third Cash installment Lease Receivable At end of 3rd month Unearned Interest: Leases Interest Revenue: Leases 21-27 E21-9 (continued) 2. Computation of Lessee's Obligation Using the Implicit Interest Rate PV of lease payments = $ 2,000 + PV of remaining 3 5 payments of $2,000 each at 1% = $ 2,000 + $58,817 = $60,817* *Note: By definition, the present value of the lease payments equals the initial payment plus the present value of the remaining lease payments, since the initial payment is at the beginning of the period.At inception Initial payment At end of 1st month Leased Equipment Capital Leases Obligation Capital Lease Obligation Cash Interest Expense Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($60,817 ? 36) Second Accrued Interest on installment Capital Lease Obligation Capital Lease Obligation Cash At end of Interest Expense 2nd month Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment 60,817 2,000 588 588 1,689 1,689 588 1,412 574 574 1,689 1,689 60,817 2,000 ,000 21-28 E21-9 (continued) 2. (continued) Third Accrued Interest on installment Capital Lease Obligation Capital Lease Obligation Cash At end of 3rd month Interest Expense Accrued Interest on Capital Lease Obligation Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment E21-10 Computation of the effect on income before income taxes using the sales-type lease method Sales = PV of lease payments receivable = (PV factor for 8 payments in advance at 12%) x $60,000 = 5. 563757 x $60,000 = $333,825 Cost of asset leased = = Cost of the property $275,000 574 1,426 560 560 1,689 1,689 ,000 21-29 E21-10 (continued) Interest revenue: leases = 12% x [(Lease receivable – Initial payment) Unearned interest: leases] = 12% x [($60,000 x 8) – $60,000) – (Lease rec. – Sales)] = 12% x ($420,000 – $146,175) = $32,859 Incremental effect on income before income taxes Sales Less: Cost of asset leased Gross margin Add: Interest revenue Incremental revenue recognized $333,825 (275,000) $ 58,825 32,859 $ 91,684 Computation of the effect on income before in come taxes using the operating lease method Rental revenue Depreciation expense = $60,000. 0 = = Cost – Residual Value Economic life $275,000 – $0 8 = $34,375 Incremental effect on income before income taxes Rental revenue $60,000 Less: Depreciation expense (34,375) $25,625 Effect on income before income taxes Sales-type lease income Operating lease income Income before income taxes $91,684 (25,625) $66,059 understated 21-30 E21-11 1. Computation of Income Before Income Taxes Derived by Reuben Company for Year Ended December 31, 2010 Rental revenue Maintenance expense Depreciation expense Income before income taxes *10/12 x $180,000 #$900,000 150,000* (20,000) (90,000)# $ 40,000 ? 10 (It should be depreciated for a full year) 2. Rent expense = 10/12 x $180,000 = $150,000 E21-12 1. Application of Criteria for Determination of Lease Classification from Lessor's Viewpoint Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met Yes No Y es 80% ( Remarks Lease term is 75% or more of economic life 4 year lease life ) 5 year economic life 4. Present value of lease payments is 90% or more of fair value Column B Criteria 1. Collectibility assured 2.No uncertainties Yes Present value is $8,400, or 100% of the fair value Yes Yes Since the lease meets at least one of the Column A criteria and both of the Column B criteria, and there is no dealer's profit (PV of lease payments – Cost of car = $8,400 – $8,400 = $0), the transaction should be classified as a direct financing lease. 21-31 E21-12 (continued) 2. Summary of lease payments received and interest revenue: Computation of amount of lease receipts: Yearly lease receipt = Cost of the car PV factor for 4 payments at 10% $8,400 3. 169865 = $2,649. 96 (Table follows Requirement 3) 3. 2010 Jan. 1 1 Automobile Held for Lease Cash Lease Receivable Automobile Held for Lease Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue : Leases (from table) Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases (from table) 8,400. 00 10,599. 84 8,400. 00 8,400. 00 2,199. 84 2,649. 96 Dec. 31 31 2,649. 96 840. 00 840. 00 2,649. 96 659. 00 659. 00 2011 Dec. 31 31 2,649. 96 21-32 E21-12 (continued) 2.Summary of Lease Payments Received and Interest Revenue Earned by the Ravis Rent-A-Car Company (by Interest Method) (1) (2) Annual Lease Payments Received $2,649. 96 2,649. 96 2,649. 96 2,649. 96 (3) Interest Revenue at 10% on Net Investment $840. 00a 659. 00 459. 90 240. 94f (4) Amount of Net Investment Recovered $1,809. 96b 1,990. 96 2,190. 05 2,409. 02 (5) Lease Receivable $10,599. 84 7,949. 88c 5,299. 92 2,649. 96 -0(6) Unearned Interest: Leases $2,199. 84 1,359. 84d 700. 84 240. 94 -0(7) Net Investment $8,400. 00 6,590. 04e 4,599. 08 2,409. 02Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 a$8,400. 00 b$2,649. 96 21-33 x 10% – $840. 00 – $2 ,649. 96 – $840. 00 – $1,809. 96 c$10,599. 84 d$2,199. 84 e$8,400. 00 fAdjusted for $0. 04 rounding error 21-33 E21-13 1. Present value of lease payments = $10,000 x PV factor for 6 payments at 10% = $10,000 x 4. 355261 = $43,552 (rounded down for simplicity) = $50,000 fair value of the machine – $43,552 = $6,448 = $6,448 x FV of 1 factor for 6 periods at 10% = $6,448 x 1. 771561 = $11,421 (rounded) Present value of residual valueResidual value at the end of the lease term 2. 20-34 Since the first three criteria are not met, the classification of the lease depends on the fourth criterion. A guaranteed residual value is not included in the minimum lease payments. Therefore, Baker Company would classify the lease as a capital lease because the fourth criterion is met as follows: Present value of minimum lease payments = = $43,552 + $6,448 $50,000, or 100% of the fair value of the machine 3. Since the first three criteria are not met, the classification of the leas e depends on the fourth criterion.An unguaranteed residual value is included in the minimum lease payments. Therefore, Baker Company would classify the lease as an operating lease because the fourth criterion is not met as follows: Present value of minimum lease payments = $43,552, or 87. 1% of the fair value of the machine E21-14 1. 2010 Jan. 1 Cash Land Unearned Profit on Sales-Leaseback Leased Land Capital Lease Obligation Insurance and Property Tax Expense Cash 31 Capital Lease Obligation Interest Expense – Leases (14% x $2,500,000) Cash 21-34 2,500,000 2,000,000 500,000 2,500,000 12,000 1 During the year Dec. ,500,000 12,000 7,007 350,000 357,007 E21-14 (continued) 2. The $500,000 unearned profit is amortized by the straight-line method over the 25 year term of the lease. The yearly entry is 2010 Dec. 31 Unearned Profit on Sales – Leaseback Realized Profit on Sales – Leaseback 20,000 20,000 21-35 SOLUTIONS TO PROBLEMS P21-1 1. Application of Criteria for De termination of Lease Classification Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met No No No Remarks Lease term is 75% or more of economic life 5 year lease life 50% ( ) 10 year economic lifePV of $268,685. 58* is 88% of fair value 4. Present value of lease payments is 90% or more of fair value *PV No = (Yearly lease payments – Executory costs) x PV factor for 5 payments in advance at 12% = ($70,000 – $3,450) x 4. 037349 = $66,550 x 4. 037349 = $268,685. 58 This lease is an operating lease for both the Alice Company (lessee) and the Superior Equipment Company (lessor). Reasons: None of the Column A criteria are met. 2. Alice Company (lessee): 2010 Jan. 1 Rent Expense Cash 70,000 70,000 21-36 P21-1 (continued) 2. (continued) Superior Equipment Company (lessor): 2011 Jan.During the year Dec. 31 1 Cash Rental Revenue Property Tax Expense Maintenance Expense Insurance Expense Cash 70,000 650 1,600 1,200 70,000 3,450 Depreciation Expense: Equipment 49,500 Accumulated Depreciation: Equipment [($500,000 – $5,000) ? 10] Application of Criteria for Determination of Lease Classification 49,500 3. Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Met No No No Remarks Lease term is 75% or more of economic life 5 year lease life 50% ( ) 10 year economic life PV of $305,000* (rounded) 100% of fair value . Present value of lease payments is 90% or more of fair value *PV Yes = [(Yearly lease payments – Executory costs) x PV factor for 5 payments in advance at 12%] + PV of guaranteed residual value = = = = [($70,000 – $3,450) x 4. 037349] + ($64,000 x 0. 567427) ($66,550 x 4. 037349) + $36,315. 33 $268,685. 57 + $36,315. 33 $305,000 (rounded) This lease is a capital lease for both the Alice Company (lessee) and the Superior Equipment Company (lessor). Reasons: †¢ The lessee would classify the lease as a capital lease because one of the Column A criteria i s met. The lessor would classify the lease as a direct financing lease because (a) one of the Column A criteria is met, (b) both of the Column B criteria are met, and (c) there is no profit at the inception of the lease (fair value = present value of the minimum lease payments). 21-37 P21-1 (continued) 3. (continued) Alice Company (lessee): 2010 Jan. 1 1 Leased Equipment Capital Lease Obligation Executory Costs Expense Capital Lease Obligation Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment [($305,000 – $64,000) ? ] Interest Expense [12% x ($305,000 – $66,550)] Accrued Interest on Capital Lease Obligation Executory Costs Expense Accrued Interest on Capital Lease Obligation Capital Lease Obligation Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment Interest Expense [12% x ($305,000 – $66,550 – $37,936)] Accrued Interest on Capital Obligation 305,000 3,450 66,550 305,000 70,000 Dec. 31 48,200 48,200 28,614 28,614 3,450 28,614 37,936 31 2011 Jan. 1 70,000 Dec. 31 48,200 48,200 24,061. 68 24,061. 68 31 21-38 P21-1 (continued) 3. continued) 2014 Dec. 31 Capital Lease Obligation Cash 64,000 64,000 Superior Equipment Company (lessor): 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($66,550 x 5 + $64,000) Equipment Leased to Others Unearned Interest: Leases Cash Lease Receivable Property Tax Expense Maintenance Expense Insurance Expense Cash Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Property Tax Expense Maintenance Expense Insurance Expense Cash Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable 305,000 305,000 396,750 05,000 91,750 66,550 1 During The Year Dec. 31 2011 Jan. During The Year Dec. 31 2014 Jan. 66,550 650 1,600 1,200 28,614 3,450 28,614 1 66,550 650 1,600 1,200 24,061. 68 66,550 3,450 24,061. 68 1 64,000 64,000 21-39 P21-2 1. Application of Criteria for Determination of Lease Classific ation Column A Criteria 1. 2. 3. 4. Transfer of ownership at end of lease Bargain purchase option Lease term is 75% or more of economic life Present value of lease payments is 90% or more of fair value Met No Yes Yes 100% Present value is $185,090. 68 or 100% of fair value Remarks YesThis is a sales-type lease for Ballieu Company, since one or more of the Column A criteria are met, both of the Column B criteria are met, and there is a dealer's profit (PV of lease payments – Cost of asset = $185,090. 68 – $150,000 = $35,090. 68) 2. (1) Two-Year Table of Lease Payment Receipts and Interest Revenue Recognition (2) Annual Lease Payments Received $35,000. 00 35,000. 00 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $280,000. 00a 245,000. 00 210,000. 00 (5) Unearned Interest: Leases $94,909. 32b 73,896. 62 (6) Net Investment $185,090. 8 150,090. 68 171,103. 38d 136,103. 38 155,157. 85 Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 a$35,000 $21,012. 70c 19,054. 47 x8 – $185,090. 68 x 14% + $21,012. 70 b$280,000 c$150,090. 68 d$150,090. 68 21-40 P21-2 (continued) 2. (continued) 2010 Jan. 1 Lease Receivable ($35,000 x 8) Sales Unearned Interest: Leases ($280,000 – $185,090. 68) Cost of Asset Leased Specialty Equipment (Inventory) Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 280,000. 0 185,090. 68 94,909. 32 1 1 Dec. 2011 Jan. Dec. 3. 31 150,000. 00 35,000 21,012. 70 150,000. 00 35,000 21,012. 70 1 31 35,000 19,054. 47 35,000 19,054. 47 The lessor must disclose: a. A general description of the leasing arrangements b. (1) The components of the net investment at the date of each balance sheet presented: (a) The future lease payments to be received (b) The unearned interest revenue: leases (2) Future lease payments to be received for each of the 5 succeeding fiscal years as of the date of the latest ba lance sheet presented P21-3 1.Present value = Lease payments x PV factor for 5 payments at 12% (asset and liab) = $83,222. 92 x 3. 604776 = $300,000 (rounded) 21-41 P21-3 (continued) 2. (1) Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 a$300,000 Summary Table of Lease Payments and Interest Expense for Timmer Company (2) Lease Payment Required $83,222. 92 83,222. 92 83,222. 92 83,222. 92 83,222. 92 (3) Interest Expense at 12% on Obligation Balancea $36,000. 00a 30,333. 25 23,986. 49 16,878. 12 8,916. 74d (4) Reduction of Lease Obligation $47,222. 2b 52,889. 67 59,236. 43 66,344. 80 74,306. 18 (5) Balance of Lease Obligation $300,000. 00 252,777. 08c 199,887. 41 140,650. 98 74,306. 18 -0- x 12% – $36,000. 00 – $47,222. 92 b$83,222. 92 c$300,000. 00 3. 2010 Jan. Dec. 1 31 Leased Equipment Capital Lease Obligation Capital Lease Obligation Interest Expense Cash Insurance Expense Property Tax Expense Cash Depre ciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000. 00 ? 5) Capital Lease Obligation Interest Expense Cash Insurance Expense Property Tax Expense Cash 21-42 300,000 47,222. 2 36,000. 00 3,760 5,440 300,000 83,222. 92 31 9,200 31 60,000 60,000 52,889. 67 30,333. 25 3,100 5,330 2011 Dec. 31 83,222. 92 31 8,430 P21-3 (continued) 3. (continued) Dec. 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment TIMMER COMPANY Balance Sheet (Partial) December 31, 2010 Assets Property, Plant, and Equipment Leased property less accumulated amortization $240,000. 00 (Note X) a$83,222. 92 60,000 60,000 4. Liabilities Current Capital lease obligation Noncurrent Capital lease obligation (Note X) $ 74,306. 17a,c $178,470. 1b,c x 0. 892857 – $74,306. 17 b$252,777. 08 cThese amounts computed by the â€Å"change in present value approach† are $52,889. 67 and $199,887. 41, respectively Under U. S. GAAP, the Timmer Company would classify the lease as an operating lease. The lease does not meet either of the first two criteria. The third criterion is not met since the 3-year lease life is 60% of the economic life of 5 years. The fourth criterion is also not met since the present value of the lease payments of $269,507 ($120,000 x 2. 245890) is 89. 8% of the fair value of $300,000.Therefore, the lease would be an operating lease. Under IFRS, the Timmer Company would have to exercise judgment but it is likely that it would classify the lease as a â€Å"finance† lease since two of the indicators would probably be considered to be met. The present value of 89. 8% is probably â€Å"substantially all† of the fair value of the asset. Also, it could be argued that 60% is the â€Å"major part† of the economic life of the asset. 5. 21-43 P21-4 1. Summary Table of Lease Payments Received and Interest Revenue Earned by the Calden Company (1) (2) Lease Payment Received $65,000. 0 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 65,000. 00 (3) Interest Revenue at 15% on Net Investment $46,203. 16c 43,383. 63 40,141. 17 36,412. 35 32,124. 20 27,192. 83 21,521. 76 14,999. 87h (4) Reduction of Net Investment $18,796. 84d 21,616. 37 24,858. 83 28,587. 65 32,875. 80 37,807. 17 43,478. 24 50,000. 13 (5) Lease Receivable $570,000a 505,000e 440,000 375,000 310,000 245,000 180,000 115,000 50,000 (6) Unearned Interest: Leases $261,978. 97 215,775. 81f 172,392. 18 132,251. 01 95,838. 66 63,714. 46 36,521. 63 14,999. 7 -0(7) Net Investment $308,021. 03b 289,224. 19g 267,607. 82 242,748. 99 214,161. 34 181,285. 54 143,478. 37 100,000. 13 50,000. 00i Date January 1, 2010 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 a$570,000 21-44 is the undiscounted value of the lease payments plus the unguaranteed residual value is the present value of the lease payments plus the present valu e of the unguaranteed residual x 15% b$308,021. 03 value c$308,021. 03 d$65,000. 00 e$570,000 $46,203. 16 – $46,203. 16 – $18,796. 84 residual value – $65,000 f$261,978. 97 g$308,021. 03 hAdjusted for $0. 15 rounding error iUnguaranteed 21-44 P21-4 (continued) 2. Criteria for direct financing lease: Application of Criteria for Determination of Lease Classification Column A Criteria 1. Transfer of ownership at end of lease 2. Bargain purchase option 3. Lease term is 75% or more of eonomic life 4. Present value of lease payments is 90% or more of fair value *PV of minimum lease payments Met No No Yes 89% ( 8 year lease life ) 9 year economic life Remarks 0-45 Yes PV is 94. 7% of the fair value of the leased asset* = $65,000 x PV factor for 8 payments at 15% = $65,000 x 4. 487322 = $291,675. 93 Column B Criteria 1. Collectibility assured 2. No uncertainties Met Yes Yes Remarks The lease is properly classified as a direct financing lease because at least one of the Column A criteria is met, both of the Column B criteria are met, and there is no dealer's profit. 3. 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($520,000 + $50,000) Equipment Leased to Others Unearned Interest: Leases 308,021. 3 308,021. 03 570,000 308,021. 03 261,978. 97 21-45 P21-4 (continued) 3. (continued) Dec. 31 31 2011 Dec. Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases CALDER COMPANY Balance Sheet (Partial) Assets Current Assets Net investment in direct financing leases (Note X) Noncurrent Assets Net investment in direct financing leases (Note X) a$65,000 65,000 46,203. 16 5,000 46,203. 16 31 31 65,000 43,383. 63 65,000 43,383. 63 2012 Dec. 31 31 65,000 40,141. 17 65,000 40,141. 17 4. December 31, 2011 2010 $ 56,521. 73a,d $ 56,521. 73a,c $211,086. 09b,d $232,702. 46b,c x 0. 869565 $289 ,224. 19 – $56,521. 73; 12/31/11: $267,607. 82 – $56,521. 73 b12/31/10: cThese amounts computed by the â€Å"change in present value approach† are $21,616. 37 and $267,607. 82, respectively amounts computed by the â€Å"change in present value approach† are $24,858. 83 and $242,748. 99, respectively dThese 21-46 P21-5 1. a) Landlord Company computation of annual rental amount Annual rental amount = = Cost of equipment PV factor for 6 receipts in advance at 14% $300,000 4. 433081 = $67,673. 02 (b) Tenant Company computation of the present value of the lease rights: To find the present value of the lease rights, Tenant Company would multiply the annual rental payment ($67,673. 02) by the PV factor for 6 periods paid in advance at i%. The percentage i would be the lower of 14% or Tenant Company's incremental borrowing rate. This incremental borrowing rate is the additional information needed.Summary Table of Lease Payments Received and Interest Revenue Recog nition for the Landlord Company (1) (2) Annual Lease Payments Received $67,673. 02 67,673. 02 67,673. 02 67,673. 02 67,673. 02 67,673. 02 2. Date Jan. 1, 2010 Jan. 1, 2010 Dec. 31, 2010 Jan. 1, 2011 Dec. 31, 2011 Jan. 1, 2012 Dec. 31, 2012 Jan. 1, 2013 Dec. 31, 2013 Jan. 1, 2014 Dec. 31, 2014 Jan. 1, 2015 a$67,673. 02 (3) Interest Revenue at 14% on Net Investment (4) Lease Receivable $406,038. 12a 338,365. 10 270,692. 08 203,019. 06 135,346. 04 67,673. 02 0 (5) Unearned Interest: Leases $106,038. 12b 73,512. 4 45,907. 18 23,911. 52 8,310. 69 0 (6) Net Investment $300,000. 00 232,326. 98 264,852. 76d 197,179. 74 224,784. 90 157,111. 88 179,107. 54 111,434. 52 127,035. 35 59,362. 33 67,673. 02 0 $32,525. 78c 27,605. 16 21,995. 66 15,600. 83 8,310. 69e x6 – $300,000. 00 x 14% d$232,326. 98 eAdjusted + $32,525. 78 b$406,038. 12 c$232,326. 98 for $0. 04 rounding error This table would also be suitable for Tenant Company if Tenant's incremental borrowing rate is ? 14%. 21-47 P21-5 (continued) 3. Journal entries: Tenant Company (lessee): 2010 Jan. 1 1 During the year Dec. 1 Leased Equipment Capital Lease Obligation Capital Lease Obligation Cash Insurance Expense Property Tax Expense Cash Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment ($300,000 ? 6) Interest Expense Accrued Interest on Capital Lease Obligation Accrued Interest on Capital Lease Obligation Capital Lease Obligation Cash Insurance Expense Property Tax Expense Cash 31 Depreciation Expense: Leased Equipment Accumulated Depreciation: Leased Equipment Interest Expense Accrued Interest on Capital Lease Obligation 300,000 67,673. 2 700 800 300,000 67,673. 02 1,500 50,000 50,000 32,525. 78 32,525. 78 31 2011 Jan. 1 32,525. 78 35,147. 24 600 750 67,673. 02 During the year Dec. 1,350 50,000 50,000 27,605. 16 27,605. 16 31 21-48 P21-5 (continued) 3. (continued) Landlord Company (lessor): 2010 Jan. 1 1 Equipment Leased to Others Cash Lease Receivable ($67,673. 02 x 6) Equipm ent Leased to Others Unearned Interest: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases Cash Lease Receivable Unearned Interest: Leases Interest Revenue: Leases 300,000. 0 406,038. 12 300,000. 00 300,000. 00 106,038. 12 67,673. 02 32,525. 78 1 Dec. 2011 Jan. Dec. 4. 31 67,673. 02 32,525. 78 1 31 67,673. 02 27,605. 16 67,673. 02 27,605. 16 Income statements and balance sheets: Tenant Company Disclosure (Lessee) Comparative Balance Sheets (Partial) December 31 Assets 2011 2010 Liabilities 2011 2010 Leased equipment less accumulated amortization (Notes 1 and 2) $200,000. 00 $250,000. 00 Current Capital lease obligation $ 67,673. 02 Noncurrent Capital lease obligation 157,111. 88 (Notes 1 and 2) $ 67,673. 02 197,179. 74