Question: Refer to the preceding problem. Compare income statement and balance sheet effects of treating the lease as a capital lease rather than an operating lease.

Refer to the preceding problem. Compare income statement and balance sheet effects of treating the lease as a capital lease rather than an operating lease. Ignore income taxes. You can do this by filling in the blanks in the followingtable.

Operating Lease Capital Lease Difference Total expenses 20X1 20X2 Two years together End of 20X1 Total assets Total liabilities Retained earnings End of 20X2 Total assets Total liabilities Retained earnings

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