Background: Balance Sheet Reporting Issues

Judgment Crumple Car Rentals is planning to expand into the western part of the United States and needs to acquire approximately 400 additional automobiles for rental purposes. Because Crumples cash reserves were substantially depleted in replacing the bumpers on existing automobiles with new fashion plate bumpers, the expansion funds must be acquired through other means. Crumples management has identified two options:

1. Issue additional debt.
2. Create a wholly owned leasing subsidiary that would borrow the money with a guarantee for payment from Crumple. The subsidiary would then lease the cars to the parent.

The acquisition price of the cars is approximately the same under both alternatives

Instructions

You have been asked to compare and contrast the two alternatives from the perspective of

1. The impact on Crumples consolidated balance sheet.
2. Their legal ramifications.
3. The ability to control the maintenance, repair, and replacement of automobiles.

What other alternatives might be used in acquiring the required automobiles? Select your preferred alternative and show why it is the better choice.

You are expected to:

• Write with clarity and precision using correct English grammar: mechanics (punctuation) and usage (sentence structure and vocabulary).
• Exhibit competence in writing for specific purposes, diverse audiences, and genres.
• Correctly and ethically present scholarly writings utilizing the selected citation and writing style deemed appropriate for the students program of study.

please do all in own words do not copy and paste please