Now I will discuss the comparison of accounting for operating leases under GAAP and IFRS. The accounting treatment is almost the same. Basically, an operating lease is a rental arrangement under which the lessor collects rents from the lessee for the use of the leased assets. For the lessee, operating leases only hit the income statement as the lessee recognizes rent expense over the lease term, while the lessor records rental income and depreciate the leased assets over the useful life. For this
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Restructuring Debt Accounting 545 PART A Debt can be categorized into three major categories, bonds, notes payable, and capital leases. They are all forms of debt that have similarities and differences. The comparison for the current reporting for debt based on bonds, notes payable and capital leases are stated below: Bonds: Bonds are considered long-term liabilities and have a different maturity date then current liabilities. The maturity date for a bond is usually a longer period of
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Intermediate Accounting III October 9th, 2014 To: Big Bear Power Date: October 7, 2014 Re: The Bear Minimum Summary Big Bear Power, a public utility company, has entered into a 10-year non-cancelable agreement with Goliath Company to lease a turbine. The lease is effective on January 1, 2011. The purpose of this report is to provide Big Bear with insight in evaluating whether the costs or potential costs associated with the lease should be included in the “minimum lease payments” according
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entered into a lease agreement with WeRentSpace, Inc. (WRS) to rent space for its corporate offices. Based on the lease agreement, the lease is properly classified as an operating lease. The lease has a 10-year lease term (expires on December 31, 2023), and there is no option to renew nor is the ability to negotiate for renewal provided in the lease agreement. In addition, the lease agreement contains two provisions that require NMR to incur certain one-time costs at the end of the lease term. The provisions
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RESEARCH: Accounting Standard Codification (ASC) 1. FASB had four primary goals in developing the codification. List these four goals: 1. Simplify user access to all authoritative U.S. GAAP by putting them all in one place with codification 2. Assist FASB with the research and international convergence efforts required during the standard-setting process 3. Become the authoritative source of literature for the completed extensible business reporting language (XBRL) taxonomy 4. Clarify that
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company operating under IFRS, leased equipment from Lessor Inc. for a period of three years. Lease payments of $100,000 are paid annually by Lessee Ltd., as well as $2,000 of other expenses including insurance, taxes and maintenance. The lessee’s incremental borrowing rate is listed at 11%, and the lessor’s implicit rate is calculated at 10%. The equipment reverts back to the lessor at the termination of the lease. The equipment has a 4-year useful life and a fair value of $265,000. Additionally, the
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09-4 Needs Space: Accounting for Lease Agreements Background NeedsSpace have entered into a leasing agreement with WeHaveIt to rent space for its corporate offices. Certain provisions have been included within the lease that Needs Space must take into consideration. ASC 840 has defined this lease as an operating lease. Key Facts The lease agreed upon is a 10-year term lease with no option to renew. Furthermore, there is no ability to negotiate for renewal. The following provisions are included
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All Quizzes, Midterm Exam, Final Exam Solution Instant Download Chapter 1 Multiple Choice: 1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States? a. Securities and Exchange Commission b. Financial Accounting Standards Board c. International Accounting Standards Committee d. Internal Revenue Service Answer 2. What historical evidence of the business operations of the private estate of Apollonius was discovered early
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IASB Agenda ref FASB Agenda ref 3G 274 STAFF PAPER REG FASB│IASB Meeting Project Paper topic CONTACT(S) March 2014 Leases Lease Term Anna Heining Sarah Geisman Scott A. Muir aheining@ifrs.org sgeisman@ifrs.org samuir@fasb.org +44 (0)20 7246 6428 +44 (0)20 7246 6464 +1 (203) 956 3478 This paper has been prepared by the staff of the IFRS Foundation and the FASB for discussion at a public meeting of the FASB or IASB. It does not purport to represent the views of any individual members
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While some might categorize accounting as a matter of strict principles, numbers and exactitude, there are people who disagree and argue that there is a creative side to it. The article “Creative Accounting: How to Buff a Company” by Ken Brown elaborates on it. Summary Accounting has never been an exact science; yet, auditors often face the situations where their judgment is required. This judgment must be applied to hundreds of transactions, depending on the company. While doing this, they do
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