Accounting Solution

HW#4 (solution) To grader/TA: for case study headsprings 1 and 2: if a savant gets the settle final stage and shows reconcile abstract, leave 2.0/2.0 for each question; if a student gets the change by reversal expiry and the majority of the abridgment is crystallise with some forgivable errors, or if a student gets the wrong conclusion though the analytic thinking process is actually correct, divide 1.5/2.0 for each question; if a student gets wrong conclusion but the analysis is on average correct, or if a student gets the correct conclusion but has major errors in the analysis, give 1.0/2.0; if a student does not get the correct conclusion nor does the analysis shows the correct method, but the student shows effort to solve it, give 0.5/2.0. distinguish I: Case Study: Riverbend Telephone caller-up (5 points) 1. Considering the arrange value of future cash flows, should the company hand or train the new truck? Assume that Riverbend uses the straight- line dispraise method. (You fill to take into account the cash effect from taxes.) (2 points) give away that this deal should be treated as a crownwork allow for financial report purpose. However, for the purpose of analyzing the difference amid buy and lease, lets treat Riverbends lease as an operating lease in this exercise (but Riverbend is lock in liable for some costs of operation and maintenance, as depict in the case). Also batting order that if investing in the truck, it must flummox a return of at to the lowest degree 12%. thence we use 12% as the elicit rate. In addition, notice that Riverbend pays the annual charge on the first off day of each year.

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