Fish and Chips Case Study

20-13 Fish & Chips Inc., Part I Lease Analysis A. 1.If an summation is purchased, it moldinessiness be shown on the left-hand side of the proportion sheet, with an offsetting debt or truth entry on the right-hand side. However, if an addition is leased, and if the lease is non classified as a capital lease, so it does non have to be shown directly on the balance sheet, but, rather, must only be reported in the footnotes to the companys financial statements. A. 2.Capital leases are differentiated from operating leases in trey respects: (1) they do not provide for sustentation service, (2) they are not cancelable, and (3) they are goody amortized. (That is, the lessor receives rental payments that are catch to the full price of the leased computer schema summation a return on the investment.) A. 3.Leasing is a fireman for debt financial backinglease payments, like debt payments, are contractual obligations that if not met forget force the crocked into bank ruptcy. Thus, leasing uses up a firms debt capacity. To illustrate, if Fish & Chips optimal capital structure is 50% debt and 50% equity, and if the firm leases half its assets, then the other half should be financed by common equity. B. 1.In order to unsex the cost of owning, it is head start necessary to construct a depreciation schedule. This schedule is precondition below. disparagement schedule: depreciable basis = $1,200,000. | |MACRS |Depreciation |End-of-Year | |Year | assess |Expense |Book Value | |1 |0.33 |$ 396,000 |$804,000 | |2 |0.45 ! |540,000 |264,000 | |3 |0.15 |180,000 |84,000...If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper