# Series of Q's - Can someone please Explain ?

1. An analyst has determined that Megamore Industries uses the LIFO inventory method. Megamore’s reported gross income for the year is most likely to be overstated and require adjustment by the analyst if, during the year, Megamore experienced a(n): A. increase in inventory prices. B. decrease in inventory prices. C. increase in inventory quantities. D. decrease in inventory quantities. 2) An analyst gathered the following information about the new capital lease obligation a company made at the beginning of the year: Annual end of year payments \$16,000 Term of the lease 10 years Appropriate discount rate 10% Depreciation method Straight-line Salvage assumption Zero salvage value In the first year of the lease, the cash flow from financing section of the lessee company’s statement of cash flows will contain a lease-related cash outflow that is closest to: A. \$6,169. B. \$9,831. C. \$14,400. D. \$16,000.

No 1 - is it D? LIFO liquidation?

The Answers are: 1 - D, 2 - A;

Yeah, I get A for the second question. PV of lease = 98 313 Interest payment = .10 * 98 313 = 9 831 Lease payment = 16 000 16 000 - 9 831 = 6 169 which is the principal repayment