Description
I want to write 1 & 1/2 - 2 page (single spaced) summary for the case attached, and it should be from your point of view.
Also I want you to add a point to support your writing that is in regard to the case. For example, if there are things that affected the company now regarding the issue in the case, please bring that up.
Don't forget to footnote and site the information from other sources.
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Explanation & Answer
Attached.
Lease Accounting
Name
Professor
Date
2
Organizations undertake leases in accounting to get permission to use an asset. In return,
the company will pay a specified amount of money for the lease to the owner. Business leases
are regulated by the Financial Accounting Standards Board which grants firms the right to sue
valuable assets at a fee. The Board has pointed out that accounting leases are not a one size fits
all and financial transactions often differed between companies. For this reason, the Financial
Accounting Standards Board required companies to add certain leased items to their balance
sheet as assets and a corresponding entry in the liabilities section titled capital lease1. At other
times, the Accounting Board required people to make the entry for the payment of the lease as
only operating expenses with no requirements for the accompanying asset or liability. Rachel
feels that these differences in reporting organizational leases could lead to earnings management.
The argument is valid because organizations would prefer to report fewer expenses and more
assets if given a chance so that they paint a good picture to their investors.
Generally, there are two types of accounting leases: operating and capital leases. An
operating lease refers to an agreement between ...
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