Chapter K, Problem 5Q

To determine

Other significant liabilities

Other significant liabilities are liabilities other than current and long-term liabilities. These liabilities have a significant impact on the future cash flows and financial position of the company. Contingent liabilities, lease liabilities and additional liabilities for employee fringe benefits are the examples of other significant liabilities.

Lease

Lease is an agreement where the owner of the property like building, equipment will make use of property for a specific period of time at a specific set of payments to owner. The owner of the property is known as lessor and the person who uses the property is the lessee.

Finance lease

In finance lease all the ownership risks and responsibilities are transferred from the lessor to the lessee.

To Prepare: The journal entry for lease payment.