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Summary week 5 group project acc422.docx Week 5- Group Assignment ACC/422 CA21-4 (Comparison of Different Types of Accounting by Lessee and Lessor) Part 1:Â Capital leases and operating leases are the two classifications of leases described in FASB pronoun$5.49
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Summary week 5 group project acc422.docx Week 5- Group Assignment ACC/422 CA21-4 (Comparison of Different Types of Accounting by Lessee and Lessor) Part 1:Â Capital leases and operating leases are the two classifications of leases described in FASB pronoun
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week 5 group project Week 5- Group Assignment ACC/422 CA21-4 (Comparison of Different Types of Accounting by Lessee and Lessor) Part 1: Capital leases and operating leases are the two classifications of leases described in FASB pronouncements from the standpoint of the lessee. Instruc...
week 5 group project acc422docx week 5 group assignment acc422 ca21 4 comparison of different types of accounting by lessee and lessor part 1Ânbspcapital leases and operating leases are
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Week 5- Group Assignment
ACC/422
CA21-4 (Comparison of Different Types of Accounting by Lessee and Lessor)
Part 1: Capital leases and operating leases are the two classifications of leases described in
FASB pronouncements from the standpoint of the lessee.
Instructions
(a) Describe how a capital lease would be accounted for by the lessee both at the
inception of the lease and during the first year of the lease, assuming the lease
transfers ownership of the property to the lessee by the end of the lease.
In case of capital lease the lessee will compute the present value of the minimum lease payments
for the term of the capital lease. This amount will be recorded in the books of the lessee and will
exclude expenses and costs like insurance, maintenance costs, and other executor costs. At the
inception of the lease the lessee would account for the capital lease as an asset and an obligation
in its books. Asset account will be debited and liability account will be credited with the present
value of the lease payments. Rental payments during the year would be allocated and will reduce
the obligation and will also be allocated towards interest expense.
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