Chapter 10, Problem 12E

a)

To determine

Prepare the journal entry to record a lease (simple rental arrangement).

b)

To determine

Prepare the journal entry to record the acquisition of equipment through a capital lease agreement.

c)

To determine

Explain the reason for an operating lease sometimes called off-balance sheet financing.

d)

To determine

Explain whether it is acceptable for a company to account for a capital lease as an operating lease to report rent expense rather than a long-term liability.