Explain about the initial direct costs.

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Answer 1

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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The privately-held Toys "R" Us filed for bankruptcy in fall 2017, it disclosed that it had $5 billion in debt and was spending about $400 million per year for interest on that debt. Toys "R" Us net debt was $109.0 million in 2005, just before being taken over by private equity buyers in 2005. In that takeover, the company incurred $5.3 billion in debt. Sales revenue in the twelve months before the buyout in 2005 were $11.2 billion. Sales in the twelve months ending October 2017 were $11.1 billion. During the bankruptcy and store closing announcement in March 2018, the Toys "R" Us CEO stated that the company had fallen behind on the general upkeep and condition of its stores, which contributed to the decline in sales. It has also faced intense competition from other retailers, such as Amazon.com and Walmart. Toys "R" Us had had plans during 2017 to invest in technology, upgrade its stores to have toy testing areas, and create other features that would draw customers into the stores, but…

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Answer 2

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 3

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 4

Question

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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Answer 5

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 6

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

Answer 7

Chapter 20, Problem 2C

1.

To determine

Explain about the initial direct costs.

Answer 8

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Answer 9

2.

To determine

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Answer 10

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 11

3.

To determine

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 20 - Prob. 1GI Ch. 20 - What is the difference between the lessee and...Ch. 20 - Prob. 3GI Ch. 20 - Prob. 4GI Ch. 20 - Prob. 5GI Ch. 20 - Prob. 6GI Ch. 20 - What are the two types of lease classifications...Ch. 20 - Prob. 8GI Ch. 20 - Prob. 9GI Ch. 20 - Prob. 10GI

Explain about the initial direct costs.

Solution Summary: The author explains the accounting treatment of initial direct costs for different types of leases.

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Explain about the initial direct costs.

Explain the manner Company E should account for initial direct costs if given lease is (a) an operating lease, (b) a sales-type lease, and (c) a direct financing lease.

Explain that for the given provision require that initial direct costs for sales-type lease be charged to goods sold. Explain the reasons and accounting treatment.

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