On April 1,2012,Helo Company Entered into a Five-Year Lease for Equipment.Annual

question 35

Essay

On April 1,2012,Helo Company entered into a five-year lease for equipment.Annual lease payments are $15,000,payable at the beginning of each lease year (April I).At the end of the lease,possession of the equipment will revert to the lessor.The equipment has an expected useful life of 5 years.Similar equipment could be purchased for $250,000 cash.Helo's incremental borrowing rate is 12%.The company has a March 31 year-end,and it uses straight-line depreciation for its property,plant,and equipment.
Requirements:
a.Prepare the journal entries relating to the lease and leased asset for Helo's fiscal year ending March 31,2013.
b.State the amounts related to the lease that would be reported on the March 31,2013 balance sheet,indicating the balance sheet classifications,account names,and amounts.

Calculate changes in the Consumer Price Index (CPI) and understand their economic implications.

Understand the relationship between unemployment rates, inflation, and cyclical unemployment.

Calculate the nominal interest rate given the real rate of interest and the rate of inflation.

Identify and understand the impact of economic changes on national and global economies through specific examples.

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Definitions:

WTO

Short for World Trade Organization, an international body aimed at promoting and facilitating free trade by reducing tariffs and other trade barriers.

Tariff

A tax or duty to be paid on a particular class of imports or exports, used by governments to regulate trade.

Normal Trade Relations

A GATT principle of trade law which requires that WTO member states treat like goods coming from other member states on an equal basis.

GATT

General Agreement on Tariffs and Trade, a multilateral treaty aimed at reducing global barriers to trade and promoting international commerce.