IASB chairman David Tweedie has noted that current GAAP allows airlines' balance sheets to appear as if the companies don't have airplanes. How can this be true?
Answer to relevant QuestionsA lessee should classify a lease transaction as a capital lease if it is noncancelable and one or more of four classification criteria are met. Otherwise, it is an operating lease. What are these criteria?What are executory costs? How are they accounted for by the lessee in a capital lease when paid by the lessee? When paid by the lessor? Explain.Explain how the general classification criteria are applied to leases that involve land.Corinth Co. leased equipment to Athens Corporation for an eight-year period, at which time possession of the leased asset will revert back to Corinth. The equipment cost Corinth $16 million and has an expected useful life of ...On January 1, James Industries leased equipment to a customer for a four-year period, at which time possession of the leased asset will revert back to James. The equipment cost James $700,000 and has an expected useful life ...
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