Question: Questions: What is the main difference between an operating lease and a capital lease? Why do companies prefer one type to another? What is the

Questions:

  1. What is the main difference between an operating lease and a capital lease? Why do companies prefer one type to another?
  2. What is the economic difference between purchasing an asset with debt and leasing an asset?
  3. What incentives do managers have to increase earnings? Would a manager ever want to decrease earnings? Why?
  4. What is the difference between an economic effect and a reporting effect? Do reporting effects matter?
  5. Why would a company prefer to keep leases off the balance sheet?
  6. What is the difference between floating and fixed GAAP?

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