Cab Thoma & Gabriel Massey
FASB CASE 15-2
1.
Date
Installment
Interest
Decrease in Bal.
Outstanding Bal.
$40,000,000
12/31
$2,398,303
0
$2,398,303
$37,601,697
3/31
$2,398,303
$37,601,697*2%=
$752,034
$1,646,269
$35,955,428
6/30
$2,398,303
$35,955,428*2%=
$719,109
$1,679,194
$34,276,234
9/30
$2,398,303
$34,276,234*2%=
$685,525
$1,712,778
$32,563,456
12/31
$2,398,303
$32,563,456*2%=
$651,269
$1,747,034
$30,816,422
2. Depreciation for the year = $40,000,000/5
= $8,000,000
Book value after the year is lease value less accumulated depreciation.
=$40,000,000-$8,000,000
=$32,000,000
3. Dowell would rely on the citation,
FASB ACS 840-30–40 “Leases-Capital Leases-Derecognition.”
Lease Payable
$30,816,422
Loss on sublease
$1,183,578
Accumulated Depreciation
$8,000,000
Leased Asset
$40,000,000