“When accounting for a lease, it is necessary to determine whether the lease is a capital lease or a finance lease.” Do you agree? Explain.
Answer to relevant QuestionsCertain leases are essentially equivalent to purchases financed with debt. A company must account for such leases as if the asset had been purchased. Explain.“It is unethical for big companies to recognize a large income tax expense on their income statements reported to the public but to pay a small amount to the government.” Do you agree? Explain. Bond covenants usually restrict the borrower’s rights in various ways. An example might be a restriction that no additional long-term debt could be issued unless the debt-to-total assets ratio was below .50. Who benefits ...As a lender, you are contemplating a covenant that is based on the interest-coverage ratio. A young member of your organization with a new MBA degree has suggested that you calculate the ratio using actual cash interest ...On December 31, 20X1, Hartley Company issued a 3-year $10,000 bond that promises an interest rate of 12%, payable 6% semiannually. Compute the discounted present value of the principal and the interest as of December 31, ...
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