Acc201 Chapter 10 important information part 3

Acc201 Chapter 10 important information part 3 - In many...

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In many cases, a company's need for debt capital exceeds the financial ability of any single creditor. In these situations, the company may issue publicly traded debt called bonds. Bonds will be discussed in detail in the next chapter. Many companies with foreign operations elect to finance those operations with foreign debt to lessen exchange rate risk. This type of risk exists because the relative value of each nation's currency varies on virtually a daily basis. Even if a company does not have international operations, it may elect to borrow in foreign markets. Interest rates often are low in countries experiencing a recession. These situations give corporations the opportunity to borrow at a lower cost. Part I When a company leases an asset on a short-term basis, the agreement is called an operating lease. No liability is recorded when an operating lease is created. Instead, a company records rent expense as it uses the asset. For a
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This note was uploaded on 03/19/2008 for the course ACCT 201 taught by Professor Anothony during the Fall '07 term at Michigan State University.

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Acc201 Chapter 10 important information part 3 - In many...

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