Answered: Explain the difference between…

Explain the difference between operating and capital leases. How does the accounting treatment differ for each type of lease?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter20: Accounting For Leases

Section: Chapter Questions

Problem 14GI: Why are compound interest concepts appropriate and applicable in accounting for a sales-type lease?

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Similar questions

How is interest determined in a capital lease transaction? How does the approach compare to other forms of debt (say bonds payable or notes payable)?
What are executory costs? How are they accounted for by the lessee in a capital lease when paid by the lessee? When paid by the lessor? Explain.
What do you think is the main difference of accounting for lease on the part of the lessee and lessor?
How does the analysis of a sale-leaseback differ from the analysis of owning versus leasing?
Describe the lessee's accounting for sale-leaseback transactions.
Why are compound interest concepts appropriate and applicable in accounting for a sales-type lease?
What is the basic difference between the accounting procedures used by a lessor for a sales-type lease and those used for a direct-financing lease?
What are the criteria for classifying a lease as operating or capital? Why is there a difference between the two? What are the implications of an operating lease versus a capital lease on an entity’s financial statements?
Which of the following is not one of the classifications for leases from the lessor’s viewpoint? Operating. Sales-type. Direct financing. Off-balance sheet.
What is lease assignment? What is subletting? Explain at least one main difference between these methods.
The basic concept of “substance over form” influence lease accounting. Explain in detail how it does affect lease accounting?
Of what significance is (a) an unguaranteed and (b) a guaranteed residual value in the lessor's accounting for a sales-type lease transaction?