The junior accountant interpreted the lease as an operating lease based on the fact that the equipment reverts to the lessor at the end of the lease. However, in this case, all risks and rewards of ownership are substantially transferred to the lessee. 2. IAS 17-paragraph 10 states that classifying a finance lease depends on the substance of the transaction rather than the form of the contract by meeting individually or in combination situations (a) through (e). Of these situations, two have been met: (c) the lease term is for the major part of the economic life of the asset even if title is not transferred and (d) at the lease inception, the present value of the minimum lease payments amount to at least substantially all of the fair value of the leased asset.
| cash conversion cycle | b. | inventory conversion period | c. | receivables collection period | d. | payables deferral period | e. | days sales outstanding | 6. The average length of time between the purchase of raw material and labor and the payment of cash for them is called the ____. a. | cash conversion cycle | b.
The accounting procedures are the same and the criteria that must be met is the same the only difference is the profit or loss of the dealer or manufacturer. Operating Leases Operating leases are those that do not fall into any of the other lease categories and mainly are leases that usually pertain to rental of property or equipment that the lessee does not intend to own at the end of the lease term. The operating leases are accounted for by the lessor in the following: The initial direct costs will be deferred and allocated over the course of the lease term in proportion of the rental income recognition. Summary Leases can be a beneficial tool for companies to get property or equipment that they might not otherwise be able to afford at this point; however, much goes into the classification and reporting of leases. For 35 years the accounting standards relating to leases has been the same, but the FASB is now looking into the issues with lease and are set to issue a new ruling on certain parts of the lease reporting.
__T__ 7. Certain types of leases, called capital leases, allow the lessee to account for the transaction as a rental. __F__ 8. The book value of a plant asset is always equal to its fair market value. ___T_ 9.
They are based on two ways: 1) The company contribution – a percentage of pay or a flat dollar amount – determined by a specified formula 2) An annual interest credit. The rate of return is guaranteed and is independent of the plan's investment performance. That rate may either be a fixed rate over time or may change each
Then the net operating income is converted to an estimated value for the property. The calculation to do this is the net operating income divided by the capitalization rate chosen by the appraiser. The yield process is similar to the direct capitalization however it expands to future values. The current net operating income is used and
Rationale or Reasoning All the essential terms were expressed in this agreement. It set the price, the down payment, the interest rate, the approximate closing date, the personal and real property to be sold, the governing law, and the earnest money deposit. The parties could have closed their deal with this contract. Therefore, we conclude that the circuit court erred in ruling that this agreement was
| | 2. | The ending inventory and cost of goods sold will be the same whether a perpetual or periodic system is used under the: A. | weighted-average method. | B. | moving-average method.
(0.5 points) Use Credit Wisely 2. Name at least one alternate option to establishing credit if you are unable to get a credit card yet. (0.5 points) Secured Credit 3. What is debt services default? (0.5 points) Is the failure to make a payment, such as a scheduled mortgage payment or the finance charge on a credit card 4.
Quiz 9 STOCKS AND THEIR VALUATION 1(9-1) Preemptive right F G Answer: a EASY [i]. The preemptive right gives current stockholders the right to purchase, on a pro rata basis, any new shares issued by the firm. This right helps protect current stockholders against both dilution of control and dilution of value. a. True b.