Question

Refer to finance lease and operating lease accounting procedure: · What are the similarities in accounting...

Refer to finance lease and operating lease accounting procedure:

·

What are the similarities in accounting for a lease contract as a finance lease versus as an operating lease? What are the differences?

·

How would they impact current financial statements? How about future financial statements?

Homework Answers

Answer #1

Answer : financial lease is a lease in which risk and reward are transferred to o lessee at the time of transfer of asset

On the other hand in case of operating lease the risk and reward are not transferred et the time of transfer of asset

It's impact in financial statements are in operating lease the lease will record lease expenses on profit and loss account during the period which he uses asset

In case of financial lease report it an asset in balance sheet and corresponding liability stating the lease to be payable

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is creative accounting? to. Euphemism to refer to the makeup of financial statements to commit...
What is creative accounting? to. Euphemism to refer to the makeup of financial statements to commit fraud b. New practices in accounting and finance to better keep financial books c. Be innovative in how to save and follow good accounting practices in the company d. Use creativity and ingenuity in the expression of financial information
One of the most advantages of using operating leases is the potential tax benefits. A lease...
One of the most advantages of using operating leases is the potential tax benefits. A lease may allow the business to deduct the payments as operating expenses during the period that the business paid them. How would the capital lease impact the financial statements? Create a positive and negative argument in this regards.
what are the similarities and differences between leases and other means of property acquisition? How can...
what are the similarities and differences between leases and other means of property acquisition? How can these similarities and differences be reported in the financial statements?
International Accounting Standards (IFRS) 16 Leases standardizes the accounting treatment and disclosure requirements of assets held...
International Accounting Standards (IFRS) 16 Leases standardizes the accounting treatment and disclosure requirements of assets held under lease. The approach to lessor accounting classifies leases into two types, Operating lease and Finance lease. Required: Discuss any five indications that may provide evidence that a particular lease agreement may be: An operating lease                                                                  A finance lease                                                                       Briefly explain the effect of treating a finance leased asset as though it was an operating leased asset on assets, liabilities, ROCE and Gearing ratios....
1. The methods of accounting for a lease by a lessee are a. operating and sales-type...
1. The methods of accounting for a lease by a lessee are a. operating and sales-type lease methods. b. operating and finance lease methods. c. operating and direct financing lease methods. d. none of these answers are correct.     2.     In computing the present value of the lease payments, the lessee should a.   use its incremental borrowing rate in all cases. b.   use both its incremental borrowing rate and the implicit rate of the lessor, assuming that the implicit rate...
How would the financial statements be different in a leasing situation (for both operating leases and...
How would the financial statements be different in a leasing situation (for both operating leases and capital leases) for the lessee? What about the lessor (including all the types)? What disclosures should be made by lessees and lessors related to future lease payments?
Case 13-2 Lessee and Lessor Accounting for lease (Modified) On January 2, 2020, Grant Corp. leases...
Case 13-2 Lessee and Lessor Accounting for lease (Modified) On January 2, 2020, Grant Corp. leases an asset to Pippin Corp. under the following conditions (Assume new lease accounting standard (ASC 842) are effective for both companies).     1. Annual lease payments are $10,000 for 20 years. 2. At the end of the lease term, the asset is expected to have a value of $2,750. 3. The fair value of the asset at the inception of the lease is $92,625...
Looking at some of the differences between U.S. GAAP and IFRS, which is the set of...
Looking at some of the differences between U.S. GAAP and IFRS, which is the set of accounting rules followed by just about every industrialized nation outside the U.S.  While there are many similarities between the two systems, there are also some significant differences.  After learning a little bit about some of the similarities and differences, please reflect somewhat on how these differences might impact financial statement analysis, or if you think they actually would. what is a differences that exist...
What guidance does the SEC provide concerning the impact that recently issued accounting standards will have...
What guidance does the SEC provide concerning the impact that recently issued accounting standards will have on the financial statements in a future period?
Introduction to Accounting and BusinessThe financial statements are all interrelated. What operating or financial data appears...
Introduction to Accounting and BusinessThe financial statements are all interrelated. What operating or financial data appears on more then one statement? Is there a specific preparation order for the financial statements? Why is that important?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT