Leasing promulgations, Write down a guide for a 2- to

Leasing promulgations

Reference no: EM1338756

Leasing Promulgations

There are two basic forms of leases: operating and capital leases. An operating lease involves only the right to use an asset for a period of time, where the asset is returned at the termination of the lease. With a capital lease, the lessee usually makes arrangements with the lessor with an option to acquire the asset at the end of the lease period. Because capital leases must be reflected on the balance sheet or statement of financial position, there has been a tendency for companies to simply classify all leases as operating, as this would allow them to defer expenses and report a lower debt amount. Such actions are often referred to as off-balance sheet reporting and can materially misrepresent the financial position of a company. The development of IAS 17 has created guidelines for determining how to classify and report a lease and reduce the amount of controversy involved. The intent is to stop off-balance sheet techniques for lease accounting to provide stakeholders with a more accurate representation of a company's financial position. Once published, these new leasing rules will have a major impact on many companies.

Write a guide for a 2- to 4-page paper comparing capital and operating leases (similarities and differences) and explain how each are classified on financial statements. Explain how their classification and the changes in how they were reported over time impacted accounting practice.

Reference no: EM1338756

Questions Cloud

Draw a venn diagram : Only two pupils take all the four subjects. Draw a Venn diagram and use it to find how many pupils take neither Physics nor Chemistry.

What position along the chord does minimum pressure occur : At what position along the chord does the minimum pressure occur? What is special about the point where C p is a maximum?

List two benefits to sexual reproduction : List two benefits to sexual reproduction, List two benefits to asexual reproduction, Explain what monogamy, polygyny, and polyandry are

Which forecasting technique would you consider : From the choice of simple moving average, weighted moving average, exponential smoothing, and linear regression analysis, which forecasting technique would you consider the most accurate? Why?

Leasing promulgations : Write down a guide for a 2- to 4-page paper comparing capital and operating leases (similarities and differences) and describe how each are classified on financial statements. Discuss how their classification and the changes in how they were repo..

Lessor entries-sales-type lease wadkins company : The lease is for an 8 -year period and requires equal annual payments of $38,514 at the beginning of each year. The first payment is received on January 1, 2012. Wadkins had purchased the machine during 2011 for $170,000. Compute the amount of th..

Acquisition of general capital assets : The entire debt arising from the acquisition of general capital assets under a capital lease agreement should be reported as debt of the fund that accounts for the activities of the department or function using the leased asset.

Explain the goal of a position paper is to convince audience : Explain The goal of a position paper is to convince the audience that your opinion is valid and worth listening to

Calculating going rate of interest on bonds : Suppose a car company sold an issue of bonds with a 10-year maturity, a $1,000 par value-Two years after the bonds were issued, the going rate of interest on bonds such as these fell to 6%. At what price would the bonds sell?

User Account

All Pages