ACC/400 Week 5: E-text Individual Assignments

Name: ACC/400 Week 5: E-text Individual Assignments
Brand: Stony Brook University
Price: 2 USD
Availability: InStock
Author: Sofia Rivera

Individual assignments for week 5 of an accounting course.

Sofia Rivera

Contributor

4.5

about 1 month ago

Preview (3 of 7)

Running head: E-TEXT INDIVIDUAL ASSIGNMENTS 1
Week 5: E-text Individual Assignments
ACC/400

E-TEXT INDIVIDUAL ASSIGNMENTS 2
Week 5: E-text Individual Assignments
Financial Accounting Theory and Analysis: Text Readings and Cases 8th edition
Chapter 13: Case 13-4 Application of SFAC No. 13
a. What is the theoretical basis for the accounting standard that requires certain long-term
leases to be capitalized by the lessee? Do not discuss the specific criteria for classifying a
specific lease as a capital lease.
The theoretical basis of the accounting standard that requires certain long-term leases to be
capitalized by the lessee is based on the risks and the benefits associated with the assets, which
are borne by the lessee.
“The conceptual foundation underlying SFAS No. 13 is based on the view that ‘a lease that
transfers substantially all of the benefits and risks inherent in the ownership of property
should be accounted for as the acquisition of an asset and the incurrence of an obligation by
the lessee and as a sale or financing lease by the lessor’” (Schroeder, Clark, &
Cathey, 2005, p. 418).
b. How should Lani account for this lease at its inception and determine the amount to be
recorded?
Lani Company should account for this lease as a capital lease at its inception. In addition,
Lani Company should record the amount equal to present value of the minimum lease payment.
The rate is the lessee’s incremental borrowing rate or the lessor’s implicit rate. “Once the
minimum lease payments or fair market value is determined, the next step is to compute the
present value of the lease payments. The interest rate to be used in this computation is generally
the lessee’s incremental borrowing rate” (Schroeder, Clark, & Cathey, 2005, p. 423).

Preview Mode

100%

Study Now!

XY-Copilot AI

Unlimited Access

Secure Payment

Instant Access

24/7 Support

Document Chat

Document Details

University

Stony Brook University

Subject

Accounting

ACC/400 Week 5: E-text Individual Assignments

Study Now!

Document Details

Related Documents

ACC/400 Week 4: Interpreting Financial Statements Report

ACC/400 Week 5: E-text Learning Team Assignments

ACC 400 Financial Accounting Final Exam Practice

ACC 400 Financial Performance Analysis and Industry Benchmarking of Westward Corporation

Accounting

Master Managerial Accounting Techniques

Controlling and Reporting of Real Assets

Sarbanes Oxley Act, GAAP and IFRS

Team A Week 5 Problems

Accounting Audit Final Exam MCQs 2015

Company

Explore

Study Tools