A company decided to lease a food truck to promote sales across the country. The truck cost $65,000 and the company signed an irrevocable five-year lease. The company is trying to determine how to account for this asset. Which Financial Accounting Standards Board (FASB) guideline should the company use to report the truck? Capitalize the lease only because its non-cancellable. Capitalize the leased asset only if the company also capitalizes installment purchases. Capitalize the lease because it is a fixed asset. Capitalize the lease because it is long-term.
A company decided to lease a food truck to promote sales across the country. The truck cost $65,000 and the company signed an irrevocable five-year lease. The company is trying to determine how to account for this asset. Which Financial Accounting Standards Board (FASB) guideline should the company use to report the truck? Capitalize the lease only because its non-cancellable. Capitalize the leased asset only if the company also capitalizes installment purchases. Capitalize the lease because it is a fixed asset. Capitalize the lease because it is long-term.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company decided to lease a food truck to promote sales across the country. The truck cost $65,000 and the company signed an irrevocable five-year lease. The company is trying to determine how to account for this asset. Which Financial Accounting Standards Board (FASB) guideline should the company use to report the truck?
Capitalize the lease only because its non-cancellable.
Capitalize the leased asset only if the company also capitalizes installment purchases.
Capitalize the lease because it is a fixed asset.
Capitalize the lease because it is long-term.
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