This website uses cookies to ensure you have the best experience. Learn more

Liabilities Essay

284 words - 2 pages

Liabilities - Effects Of Capital Vs. Operating Leases
Capital Leases - Effects On:
• Balance sheet - At the inception of a capital lease, the company leasing the equipment will record the equipment as an asset, and the company will also recognize a liability on the balance sheet, by an amount equal to the present value of the minimum lease payments.

The discount rate used will be the lower of the following two rates:

The lessor's ...view middle of the document...

It can be over the term of the lease (most common) or over the asset's useful life, if ownership transfers or a bargain purchase option is present.
• Income statement - A capital-lease payment includes two components: one is the interest expense - which is included in the income statement but is not part of operating income (earnings before taxes from continuing operations) - and the second component is the principal payment, which is included in the income statement and operating income. The interest portion will be higher in the first few years of the lease, and is consistent with the interest expense of an amortized loan. Total income over the life of the leased assets will be the same for operating and capital leases.
• Cash flow statement - Total cash flow statements remain unaffected by operating and capital leases. That said, cash flow from operations will include only the interest portion of the capital-lease expense. The principal payment will be included as a cash outflow from cash flow from financing activities. As a result, capital leases will overstate CFO and understate CFF.

Other assignments on Liabilities

Horizontal, Vertical, Ratio Checkpoint Essay

376 words - 2 pages statement data by expressing each item as a base amount or a percentage in the financial statements. It is used in both inter- and intra- company comparisons. The ratio analysis expresses the relationships among selected items of financial statement data, which is used in all three types of comparisons. So the current ratio for 2004 would be $8639 which is the total assets divided by $6752 the total liabilities, which is equal to 1.28% For

Devry Keller Acct 504 Chapter 1 Solutions

991 words - 4 pages ------------------------------------------------- Chapter 1 The Financial Statements ------------------------------------------------- Short Exercises (5 min.) S 1-1 Computed amounts in boxes | | | | | | | | Total Assets | = | Total Liabilities | + | Stockholders’ Equity | | | | | | | a. | $300,000 | = | $150,000 | + | $150,000 | | | | | | | b. | 280,000

Fin Homework Set 5

3433 words - 14 pages 40 to 45.45 Use the following information for Questions 7 and 8: Suppose you are provided the following balance sheet information for two firms, Firm A and Firm B (in thousands of dollars). 8 DIVIDENDS, CAPITAL STRUCTURES DECISIONS Current assets Fixed assets (net) Total assets Current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity Firm A $ 150,000 150,000 $ 300,000

Post Fir Income Statement

334 words - 2 pages the income statement of Post Fir, Inc., for the year ended Decemb er 31, 2012.2. Prepare the company’s statement of retained earnings for the year. 3. Prepare the company’s balance sheet at December 31, 2012. 4. Analyze Post Fir, Inc., by answering these questions: a. Was Post Fir profitable during 2012? By how much b. b. Did retained earnings increase or decrease? By how much? c. c. Which is greater, total liabilities or total

Little Bit Inc

273 words - 2 pages Little Bit Inc. Statement of Cash Flows For Year Ended December 31, 2009 Cash flow from operating activities: Net income $ 5,500 Non-cash expenses included in net income: Depreciation $ 18,000 Deferred income taxes 500 Cash provided by (used for) current assets and liabilities: Accounts

Nortel Networks Case

253 words - 2 pages March 29, 2013 ACC230 Nortel Networks Case The Nortel case does show that Nortel has agreements in associated to the guarantee under FIN 45. The payments based on a liability, charges relating to assets, or equities security that was provided by third parties has to be made to that third party. Nortel was able to retain liabilities for the events that occurred before the sale. Nortel guaranteed escrow for specified periods and

Computer

464 words - 2 pages earnings $ D Altan Sales LTD. Balance Sheet Year Ended July 31, 2010 Assets Cash $2500 F Accounts receivable 200 Inventory 5,500 Prepaid rent 600 Equipment $13,000 Accumulated depreciation 2000 G 11,000 Total assets $19,800 H Liabilities and Shareholders' Equity Accounts payable $5,500 Notes payable 2000 I $ 7,500 Shareholders' equity

Human Resource

381 words - 2 pages considered an asset? b. Dividends 9. Liabilities are generally classified on a balance sheet as d. current liabilities and long-term liabilities. 10. Which of the following would not be classified as a long-term liability? a. Current maturities of long-term debt 11. Which of the following is not a current liability? d. Bonds payable 12. Earnings per share are calculated by dividing

Club Med

775 words - 4 pages a. I. the ordering of assets: Club Med put fixed assets before current assets but U.S. companies would do it inversely. Also, the current assets, U.S. companies follow order of liquidity so they would put bank and cash in first place and then receivables. Ordering of liabilities: U.S. companies would put liabilities before shareholder’ equities but Club Med did it inversely. Also

Major Funds Determination

700 words - 3 pages OPERATING STATEMENT TEST): 4 IDENTIFYING MAJOR FUNDS – CON’T. • A FUND NEED ONLY EXCEED 10% OF ASSETS OR LIABILITIES OR 10% REVENUES OR EXPENDITURE/EXPENSES A FUND MUST PASS THE 10% TEST BEFORE THE 5% TEST IS NECESSARY A FUND IS MAJOR IF THE 10% AND 5% CRITERIA ARE MET FOR A SINGLE ELEMENT 5 • • IDENTIFYING MAJOR FUNDS – CON’T. IF ONLY GOVERNMENTAL OR ENTERPRISE FUNDS EXIST, THE 5% TEST IS NOT USED AND THE ENTITY NEED ONLY APPLY THE 10

Finance, Tiebe

637 words - 3 pages basis does P&G use to report its investments? How much working capital did P&G have on June 30, 2007? On June 30, 2006? (d) What were P&G's cash flows from its operating, investing, and financing activities for 2007? What were its trends in net cash provided by operating activities over the period 2005 to 2007? Explain why the change in accounts payable and in accrued and other liabilities is added to net income to arrive at net cash provided by

Similar Documents

Balance Sheet Essay

254 words - 2 pages -current assets | 776,000 | 754,000 |   |   |   | Total assets | $1,347,000 | $1,263,000 |   |   |   | LIABILITIES AND EQUITY |   |   | Current liabilities |   |   | Trade and other payables | $217,000 | $198,000 | Short-term borrowings | 133,000 | 202,000 | Current portion of long-term borrowings | 5,000 | 5,000 | Current tax payable | 26,000 | 23,000 | Accrued expenses | 9,000 | 13,000 | Total current liabilities | $390,000

Acc/545 Wk 5 Los Lobos Essay

491 words - 2 pages 100,000 Property, Plant & Equipment 95,000 Less: Accum. Depreciation 16,500 83,500 Less: Accum. Depreciation 15,000 80,000 Total Assets 181,200 Total Assets 187,900 Liabilities and Equity Liabilities and Equity Current Liabilities

Learn Essay

293 words - 2 pages Financial Analysis project: Franco Nevada Corp VS. Kinross Gold RSM219H1 A Team assignment L0801 – Instructor Ralph Tassone Amen Hammad- 1000365311 Hao Xu-1000668155 Shaobo Hou- 1000127016 Andrei Baican- 1000589945 Anastasia Ionas- 999896554 Ratio analysis Working capital= current assets- current liabilities Current ratio = current assets current liabilities Inventory turnover = Cost of goods soldAverage

Week2 Wiley Plus Essay

669 words - 3 pages | ------------------------------------------------- 866 | Total assets | ------------------------------------------------- $10,688 | ------------------------------------------------- $9,870 |   |   |   | Liabilities and Stockholders' Equity | | | Current liabilities | $2,584 | $2,612 | Long-term liabilities | 1,079 | 973 | Stockholders' equity | ------------------------------------------------- 7,025 | ------------------------------------------------- 6,285 | Total