Explain why we need to convert operating lease into capital lease before the implementation of current accounting
Fantastic news! We've Found the answer you've been seeking!
Question:
- Explain why we need to convert operating lease into capital lease before the implementation of current accounting standard for operating lease and capital lease
- Prove that the amount of expenses recognized is the same for operating lease and capital lease
- Convert the following operating leases into capital leases and describe the impact of the conversion on the company’s balance sheet on 12/31/2018 and income statement for the fiscal year ended on 12/31/2018 (operating lease versus capital lease) in terms of dollar amount.
- The company’s rent expense is $1,000 (million) in 2018
- The company pays all rent expenses in the year of incurrence at the end of each year
- The company’s effective annual interest rate is 5%
- Future minimum rent payments under existing operating leases are
Year | $million |
2019 | 1,000 |
2020 | 1,000 |
2021 | 1,000 |
2022 | 1,000 |
2023 | 1,000 |
Thereafter (5 Years) | 5,000 |
Expert Answer:
upcoming lcasoterm by 090 Mnder operatingliasescompany to ruc was expendesdaruqued ... View the full answer
Posted Date:
