San Diego State University Operations And Supply Chain Management Assignment Help - straight-line

Question - On January 1, 2011, Picard Inc. purchased a new piece of equipment from LaForge Engineering to
expand its production facilities. The equipment was purchased at a cost of $800,000. Picard financed
the purchase with an $800,000 mortgage to be repaid in annual payments over five years at a rate of
10%. The mortgage was arranged through Pulaski Bank. The annual payments of $211,038 are to be
made on December 31 of each year.

Instructions:
1. Prepare a mortgage amortization schedule for the 5-year life of the mortgage.
2. Assuming the equipment is expected to last for five years (with zero salvage value), determine the
net amount at which the equipment will be reported on the balance sheet at the end of each year for
its 5-year life u ...Read More sing straight-line depreciation.
3. Compare the liability amount to be disclosed on the balance sheet at the end of each year for the 5-
year mortgage term with the asset amount to be disclosed at the end of the same years. Identify the
primary reasons for the differences each year. ...Read Less

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