Acc400

Leslie Wendel ACC/400 Week 5 Individual Book appellation 13-4 A. When a letting transfers substantially all of the risks and benefits incident to the self-control of property to the lessee, it should be capitalized by the lessee. The economic effect of such a shoot on the lessee is similar, in m some(prenominal) respects, to that of an facility purchase. B. Lani should account for this adopt at its rise as an amount of money and an obligation at an amount agree to the present cleft judgment at the bloodline of the ope post term of minimal lease payments during the lease term, excluding that parcel of land of the payments representing executor constitutes, together with any profit thereon. However, if the amount so laid exceeds the fair take account of the leased machine at the inception of the lease, the amount save as the asset and obligation should be the machines fair value. C. Lani leave alone incur interest expense equal to the interest r ate used to capitalize the lease at its inception cipher by the appropriate net carrying value of the liability. In addition, Lani go forth incur an expense relating to disparagement of the capitalized cost of the leased asset. This dispraise should be based on the estimated recyclable life of the leased asset and depreciated in a look consistent with Lanis recipe depreciation policy for owned assets.

D. The asset put down under(a) the capital lease and the accumulated depreciation should be report on Lanis December 31, 2006 balance plane classified as non menstruum and should be separately identify by Lani in its balance sheet or notes thereto. The connect obligation recorded under the capital lease should be reported ! on Lanis December 31, 2006 balance sheet fitly classified into current and noncurrent categories and should be separately set by Lani in its balance sheet. 13-5 A. For Doherty Company to classify the lease as a Capital Lease, it must meet hotshot or more(prenominal) of the following criteria: Transfer of ownership at the end of...If you indigence to get a full essay, fix up it on our website: OrderEssay.net

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