What ethical issue is at stake

Assignment Help Accounting Basics
Reference no: EM131110126

1. Baden Corporation entered into a lease agreement for 10 photocopy machines for its corporate headquarters. The lease agreement qualifies as an operating lease in all terms except there is a bargain-purchase option. After the 5-year lease term, the corporation can purchase each copier for $1,000, when the anticipated market value is $2,500. Jerry Suffolk, the financial vice president, thinks the financial statements must recognize the lease agreement as a capital lease because of the bargain-purchase agreement. The controller, Diane Buchanan, disagrees: "Although I don't know much about the copiers themselves, there is a way to avoid recording the lease liability." She argues that the corporation might claim that copier technology advances rapidly and that by the end of the lease term the machines will most likely not be worth the $1,000 bargain price. Answer the following questions.

(a) What ethical issue is at stake?

(b) Should the controller's argument be accepted if she does not really know much about copier technology? Would it make a difference if the controller were knowledgeable about the pace of change in copier technology?

(c) What should Suffolk do? 

Reference no: EM131110126

Questions Cloud

How many shares of stock and how many warrants : How many shares of stock and how many warrants can Ms. Michaels purchase? Suppose Ms. Michaels purchased the stock, held it 1 year, and then sold it for $60 per share. What total gain would she realize, ignoring brokerage fees and taxes?
What is the theoretical basis for requiring lessees : How should Perriman account for the gain on the sale portion of the sale-leaseback transaction during the first year of the lease? Why?(AICPA adapted)
Calculate the theoretical warrant value : For each of the common stock prices given, calculate the theoretical warrant value. Graph the theoretical and market values of the warrant on a set of axes with per share common stock price on the x axis and warrant value on the y axis.
Database design and sql queries : In assignment 1, you have already started the process of designing a database for the Beauty Salon mini-case (enclosed again below), mainly in the phase of conceptual database design, and a draft ER diagram has been created for this purpose. Here you..
What ethical issue is at stake : Should the controller's argument be accepted if she does not really know much about copier technology? Would it make a difference if the controller were knowledgeable about the pace of change in copier technology?
What is the appropriate amount that albertson corporation : What is the appropriate amount that Albertson Corporation should recognize for the leased aircraft on its balance sheet after the lease is signed?
The diffie hellman algorithm for key exchange : 1. In the Diffie-Hellman algorithm for key exchange, suppose Alice sends Bob (19, 3, 5) corresponding to (p, g, ga). Bob responds with (12). Determine the session key.2. Consider RSA encryption with P = 7, q = 11.
Comparison different types of accounting by lessee and lesor : Describe how a capital lease would be accounted for by the lessee both at the inception of the lease and during the first year of the lease, assuming the lease transfers ownership of the property to the lessee by the end of the lease.
How should santiago company classify each of the three lease : What amount, if any, should Santiago record as a liability at the inception of the lease for each of the three leases above?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Tranter inc is considering a project that would have a

tranter inc. is considering a project that would have a ten-year life and would require a 1200000 investment in

  Use an excel spreadsheet and the fv pv pmt functions to

use an excel spreadsheet and the fv pv pmt functions to determine the amount of each of the following rthe annual

  How would you define each pattern in your own words

In what ways do you see these patterns as making indigenous religion unique among world religions? How would you define each pattern in your own words?

  Treetop corp makes irrigation sprinkler systems for tree

treetop corp. makes irrigation sprinkler systems for tree nurseries. ramsey roe treetops new controller can find only

  Scales corporation has received a request for a special

scales corporation has received a request for a special order of 6000 units of product y45 for 13.70 each. product y45s

  Underapplied or overapplied overhead

Prepare the necessary journal entry to close the overhead account if the balance is considered immaterial.

  If management desired the smallest depreciation possible

assume that a company buys land with a building on it for 1500000. at the time of purchase the company planned to tear

  A motel has a fixed annual cost of 641000 applicable to its

a motel has a fixed annual cost of 641000 applicable to its rooms. the hotel has 208 rooms. the room rate is 90 per

  On february 24 amw purchased 4000 shares of kmp newly

on february 24 amw purchased 4000 shares of kmp newly issued 6 percent cumulative 75 par preferred stock for 304000.

  Denny corporation is considering replacing a

denny corporation is considering replacing a technologically osdolete machine with a new state of the aret numerically

  How may the damage to bakers interests

If Derek Wallace offered Baker a personal cash settlement and they agreed to employ you as an impartial arbitrator to determine the amount, what settlement would you propose? Present your calculations with sufficient explanation to satisfy both parti..

  What is the preferable presentation of accounts receivable

Which of the following is NOT considered cash for financial reporting purposes? What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd