528, I think you made a mistake. Actually you explained it pretty well but you multiplied the net cap cost X the depreciation not the residual so your number is a little low.


It should be 387.78 before taxes.

 

You are correct

(NET CAPITALIZED COST + Residual) = (30,000 + 20,000) = 50,000

Thanks for catching the error. I am an accountant, we make arithmetic errors all the time, we're supposed to. As long as we understand the concept...we're fine.

 

Wutafob,

Please verify and acknowledge that you see the error.

I feel guilty.

 

haha, so thats what they teach you at leventhal.... good deal..

 

thats not what they teach me at leventhal...i did research on my own.

at leventhal they teach you how to recognize capital leases. there are 4 criteria that the lease has to meet...

1- the buyout has to be a bargain.
2- something that has to do with 75% of something
3- i forgot
4- i forgot