ESSENTIALS OF INVESTMENTS - CONNECT ACCE
ESSENTIALS OF INVESTMENTS - CONNECT ACCE
11th Edition
ISBN: 9781266077951
Author: Bodie
Publisher: INTER MCG
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Chapter 14, Problem 10PS
Summary Introduction

To determine the most likely motivation behind management of Hartfiled Industries decision to change accounting methodology.

Introduction:

A change in accounting methodology means a change in accounting principles, accounting estimates or reporting entity.

If a lease payment is classified as operating expense it does not reflect as a part of capital of the firm while if the lease is classified as capital lease, the present value of lease expenses is treated as debt, and the interest on this amount is shown as a part of the income statement.

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