How does the accounting prescribed in SFAS No. 13 seek to make a capital lease resemble a purchase by the lessee of an asset with debt financing?
What will be an ideal response?
ANSWER:
The present value of minimum lease payments is debited to leased assets and credited to lease obligations, subject to an upper limit of the asset’s fair market value at lease inception. The asset is depreciated over its useful life if it is being leased for substantially all its useful life, with 75 percent being the materiality threshold. Otherwise, the depreciation period is the lease term, with total amortization equal to the capitalized amount less any guaranteed residual value at the end of the lease term. During the lease term, each payment is allocated between interest expense and reduction of the lease obligation. The effective interest method is used. Any executory costs, such as taxes, maintenance, and insurance, are expensed as incurred.
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Copper Company engaged in the following transactions during April Performed services for cash $215,000 Performed services on credit 108,000 Purchased office supplies on account 56,000 Paid salaries in cash 129,000 Collected on account ? Paid on account 38,000 If the balance in cash after these transactions is $115,000, how much cash was collected on account?
A) $67,000 B) $62,000 C) $15,000 D) $29,000
________ is the set of actions that its managers take to outperform the company's competitors and achieve superior profitability.
A. Strategic intent B. A strategy C. A market vision D. A mission statement E. A cost-price framework
Which of the following is NOT a distinctive characteristic of born-global firms, according to Tanev?
a. High activity in international markets from or near the founding due to founder’s vision b. Managers who have a strong international outlook c. Emphasis on competing on cost achieved through global economies of scale d. Emphasis on differentiation strategy targeting niche markets
In some states, minors are liable for contracts involving bank accounts and student loans and cannot avoid these contracts even though they can avoid other types of contracts
a. True b. False Indicate whether the statement is true or false