chapter 3 book notes

chapter 3 book notes - Liabilities Short and long term....

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Liabilities Short and long term. Alternative: operating (from op. act. i.e. AP, tax payable) and financing (from fina. act. i.e. debt, bonds, notes, leases) Important features in Analyzing Liabilities: -terms of indebtedness (maturity, interest rate, etc) -restrictions on deploying resources -flexibility in pursuing further financing -dilutive conversion features that liab. are subject to Leases Lease-contractual agreement b/t a lesser (owner) and a lessee (user) that gives the lessee the right to use an asset owned by the lessor for the lease term MLP-minimum lease payments of the lessee to the lessor according to the lease contract Capital Lease Leases that transfer substantially all benefits and risks of ownership. ..accounted for as an asset acquisition and liability incurrence by the lessee, and as a sale and financing transaction by the lessor Criteria: 1. Ownership of prop. transferred by end of the lease term 2. Lease contains option to purchase the prop. at a bargain 3. Lease term is 75% or more of estimated econ. life of the prop.
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This note was uploaded on 07/02/2011 for the course FINA 470 taught by Professor Austin during the Spring '11 term at South Carolina.

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chapter 3 book notes - Liabilities Short and long term....

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