Prior to CICA 3065, "Accounting for Leases", lease activity was only reported in financialfootnotes. This off-balance-sheet-financing made firms with:a. operating leases appear healthier than those with no leases.b. operating leases appear to have greater liabilities than firms using financial lease.Oc. financial leases appear to be financially stronger than if the leases were on-balance-sheet-financing.d. financial leases appear to have greater liabilities than firms using operatingleases.

Before CICA 3065, operating leases weren't reflected on the balance sheet, making companies that…

Answered: Prior to CICA 3065, "Accounting for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Revenue for a direct financing lease is calculated as ________. Group of answer choices None of the above. the higher of (1) the fair value of the leased asset or (2) the sum of the lease receivable and any lease payments paid before the lease commencement date the lower of (1) the fair value of the leased asset or (2) the sum of the lease receivable and any lease payments paid before the lease commencement date the lower of (1) the residual value of the asset or (2) the sum of the lease receivable and any lease payments paid before the lease commencement date
Part 1: New Lease Accounting – IFRS 16 Leases Effect Analysis. What are the top three industries most affected by IFRS 16 as measured by the present value of future payments for off-balance-sheet leases to total assets? Which leased assets propel them to the top three? Also, discuss the extent that smaller firms would be affected by IFRS 16. Which payments are to be included in the measurement of lease assets and lease liabilities? Also, discuss the pros and cons of excluding the following payments from the measurement. Variable lease payments linked to future use or sales Optional payments relating to lease-extension option when a lessee is not reasonably certain to exercise the option. Discuss the effects of the new accounting on the following items and ratios of lessees. Provide reason(s) behind all effects. EBITDA, operating profit, and profit before tax Operating cash flow, financing cash flow, and total cash flow Debt to equity, current ratio, and return on total assets
Paul Singer indicated that “all leases must now be capitalized on the balance sheet.” Is this statement correct? Explain.
All of the following are similarities with respect to the accounting for leases, under IFRS and GAAP, except: lessees recognize a right-of-use asset and related lease liability for leases with terms longer than one year. lessees use the same general lease classification criteria to determine if lessees classify leases as finance or operating. lessors under IFRS and GAAP use the same model to account for sales-type leases. GAAP and IFRS have similar qualitative and quantitative disclosure requirements for lessees and lessors.
Which of the following is nota reason why some companies lease rather than buy? A. Leasing may allow you to borrow with little or no down payment. B. Leasing can improve the balance sheet by reducing long-term debt. C. Leasing can lower income taxes. D. Leasing transfers the title to the lessee at the beginning of the lease.
The Home Depot financial statements include a disclosure statement regarding Leases. What is the company disclosing with this statement? They are noting that according to GAAP rules, they must report leases as assets. They are noting that according to GAAP rules, they must report leases as liabilities. They are explaining that leases are either operating or finance leases and what is included in each classification. They are disclosing that there are uncertain outcomes to the bottom line due to the nature of the leases. When long-term debt becomes due in the current account cycle, accountants: Have the entire long-term debt amount depreciated using the straight-line method. Issue a credit memo and debit a cash account. Move the portion due to an interim period account. Move the portion due to the current liabilities category. The primary function of Accounts Payable in accounting is: Tracking the increases in employee 401k accounts. Accounting for net change…

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