How does capital lease and operational lease affect the 3 financial statements? Please provide an indepth...
How does capital lease and operational lease affect the 3 financial statements? Please provide an indepth answer as I am new to this concept and am in need of serious help
Homework Answers
Capital leases are used to lease longer te assets and give the lessee ownership rights whereas opearting leases are used for short term leasing of assets and donot involve transfer of ownership.In capital lease lessee is allowed to claim depreciation on the assets which reduces taxable income.In operating leases the firm doesnot oen the asset and therefore it doesnot showup on the balance sheet and firm donot charge any depreciation.In capital lease present value of asset is included in the balance sheet under asset side and depreciation is charged on the income statement and on the other side the loan amount which is the net present value of all future payments is included under liabilities.Accounting for leases has been changed as per ASC 842 now we record the lease liability at present value and it is shown separately in Balance sheet where as earlier it is shown as footnote.This is the major change between operating and capital leases.
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How does capital lease and operational lease affect the 3
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Indicate how each event affects the elements of financial statements. Use the following letters to record...
Indicate how each event affects the elements of financial
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box shown below each element. You do not need to enter dollar
amounts. (Note that "Not Affected" means that the event does not
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Indicate how each event affects the elements of financial
statements. Use the following letters to record vour answer in the
box shown below each element. You do not need to enter dollar
amounts. (Note that "Not Affected" means that the event does not
affect that element of the financial statements or the event causes
an increase in that element that is offset by a decrease in the
same element.)
Indicate how each event affects the elements of financial statements. Use...
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