On January 1, 2008, a machine was purchased for $900,000 by Tom Young Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to St. Leger Inc. on January 1, 2008, at an annual rental of $210,000. Other relevant information is as follows.
1. The lease term is for 3 years.
2. Tom Young Co. incurred maintenance and other executory costs of $25,000 in 2008 related to this lease.
3. The machine could have been sold by Tom Young Co. for $940,000 instead of leasing it.
4. St. Leger is required to pay a rent security deposit of $35,000 and to prepay the last month’s rent of $17,500.
(a) How much should Tom Young Co. report as income before income tax on this lease for 2008?
(b) What amount should St. Leger Inc. report for rent expense for 2008 on this lease?
Using budget data, how many Apple iPhone 4’s would have to have been completed for Danshui Plant No. 2 to break even? 2. Using budget data, what was the total expected cost per unit if all manufacturing and shipping overhead (both variable and fixed) were allocated to...