Leslie Wendel ACC/400 Week 5 Individual Book duty assignment 13-4 A. When a letting transfers substantially all of the risks and benefits incident to the monomania of property to the lessee, it should be capitalized by the lessee. The economic effect of such a shoot on the lessee is similar, in mevery respects, to that of an induction purchase. B. Lani should account for this adopt at its rise as an amount and an obligation at an amount agree to the present persist judgment at the bloodline of the ope tempo term of token(prenominal) lease payments during the lease term, excluding that parcel of land of the payments representing executor constitutes, together with any profit thereon. However, if the amount so laid exceeds the fair appraise of the rent machine at the inception of the lease, the amount put down as the asset and obligation should be the machines fair value. C. Lani lead incur interest expense equal to the interest rate used to cap italize the lease at its inception multiply by the appropriate net carrying value of the liability. In addition, Lani give incur an expense relating to disparagement of the capitalized cost of the leased asset. This dispraise should be based on the estimated recyclable life of the leased asset and depreciated in a look consistent with Lanis mean(prenominal) depreciation policy for owned assets.
D. The asset record low the capital lease and the accumulated depreciation should be account on Lanis December 31, 2006 balance plane classified as non live and should be separately identify by Lani in its balance sheet or notes thereto. The connect obligat! ion recorded under the capital lease should be reported on Lanis December 31, 2006 balance sheet fitly classified into current and noncurrent categories and should be separately set by Lani in its balance sheet. 13-5 A. For Doherty Company to classify the lease as a Capital Lease, it must meet hotshot or more of the following criteria: Transfer of ownership at the end of...If you privation to get a full essay, fix up it on our website: OrderCustomPaper.com
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