hybrid costing1

hybrid costing1 - Capitalizing leases i . Diff: M Financial...

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Capitalizing leases Answer: e Diff: M i . Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting the a. Value of the leased asset as a fixed asset. b. Present value of future lease payments as an asset. c. Present value of future lease payments as a liability. d. Statements a and b are correct. e. Statements a and c are correct. Leasing Answer: e Diff: M ii . Which of the following statements is most correct? a. Firms that use “off balance sheet” financing, such as leasing, will show lower debt ratios once the effects of their leases are reflected in their financial statements. b. Capitalizing a lease means that the firm issues equity capital in proportion to its current capital structure, in an amount sufficient to support the lease payment obligation. c. The fixed charges associated with a lease can be as high as, but never greater than, the fixed payments associated with a loan. d. Capital, or financial, leases generally provide for maintenance
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This note was uploaded on 08/04/2011 for the course COMM 101 taught by Professor Sy during the Spring '11 term at USC.

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hybrid costing1 - Capitalizing leases i . Diff: M Financial...

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