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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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In our Anderson Company example, we assumed that the lease could not
be canceled. What effect would a cancellation clause have on the lessee’s
analysis? On the lessor’s analysis?
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- Under ASC 842 If the present value of the lease payments is less than or equal to the fair value of the asset the lessor must classify the lease as a direct financing lease. True Falsearrow_forwardWhat are the ways in which the accounting for the lease is affected?arrow_forward“When accounting for leases, standard setters prefer to overlook legal form in favour of economic substance.” Critically discuss this statement in light of the requirements of IFRS 16 Leases, and explain why the standard setters considered accounting for leases to be an area in need of standardization and discuss the rationale behind the approach adopted in IFRS 16.arrow_forward
- In the lease versus buy decision, leasing is often preferable Oa. because the lessee may have greater flexibility in abandoning the project in which the leased property is used than if the lessee bought and owned the asset. Ob. because, generally, no down payment is required, and there are no indirect interest costs. Oc. because it has no effect on the firm's ability to borrow to make other investments. Od. because the lessee owns the property at the end of the least term. Oe. because lease obligations do not affect the firm's risk as seen by investors.arrow_forwardWhat factors would tend to affect the value of a lease?arrow_forwardThe lessor would most likely prefer a ________ or ________ lease to an operating lease. Nonoperating lease treatment would permit a financial service company lessor to remove heavy machinery and equipment, jet airlines, oceangoing vessels, and such from its balance sheet and replace it with the ________, a financial asset compatible with the nature of its business. In addition, the nonoperating lease results in the recognition of ________, rather than ________ revenue. Group of answer choices standalone; operating; fair value of the leased asset; interest income; rent direct financing; operating; net investment in the lease; financing income; unearned standalone price; sales-type; fair value of the leased asset; financing income; unearned direct financing; sales-type; net investment in the lease; interest income; rentarrow_forward
- Does it say on the IFRS that Leases (for Lessees) can be recorded at Fair Value on Commencement Date? I don't recall being taught this.arrow_forwardIf the agreement type is NNN lease then why tenant are not paying their share of CAM, taxes and insurance expenses in this solution ? How to calculate Sale price in excel?arrow_forward
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