The Following Transactions Occur for the Hamilton Manufacturers

question 25

Essay

The following transactions occur for the Hamilton Manufacturers.
(a)Provide services to customers on account for $4,500.
(b)Purchase equipment by signing a note with the bank for $10,000.
(c)Pay advertising of $1,500 for the current month.
Analyze each transaction and indicate the amount of increases and decreases in the accounting equation.

Grasp the impact of depreciation, including straight-line and MACRS, on tax shields and cash flows.

Differentiate between operating leases and financial leases and understand their characteristics.

Identify the factors affecting the net advantage to leasing (NAL) and how to compute it.

Understand the implications of different CCA (Capital Cost Allowance) classes on leasing and purchasing decisions.