We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

The decision regarding the equipment composition - Individual assignment - Essay Example

Comments (1) Cite this document
Summary
Your company is currently facing a growth opportunity that requires the firm to make a decision regarding its equipment composition. It has 100 available trailers, but it would need an additional 20 trailers to obtain the contract. Since this opportunity was just presented to the company it would be hard for the firm to purchase an additional 20 trailers…
Download full paper
GRAB THE BEST PAPER
The decision regarding the equipment composition - Individual assignment
Read TextPreview

Extract of sample
The decision regarding the equipment composition - Individual assignment

Download file to see previous pages... In 1976 the FASB issued SFAS No. 13, Accounting for Leases. This statement is considered a part of the generally accepting accounting principles. During the past 35 years after the creation of SFAS No. 13 the FASB has issued a total of six statements, six interpretations, and 11 technical bulletins on leases. When working with accounting for leases there are two different perspective or elements. The two elements are accounting for lessee and accounting for the lessor. The lessor is the original owner of the asset who rents its use to the lessee in change for a recurrent installment payment during the duration of the lease contract.
There are two primary classifications of leases which are capital and operating leases. One of the most important aspects for SFAS No. 13 is that it establishes the four criteria necessary to classify a lease as a capital instead of an operating lease. If a lease fails to meet any of the four criteria established on SFAS No. 13 it fail to be classified as a capital lease. The difference between a capital lease and an operating lease is that a capital lease considers the property leased an asset in the accounting books of the company because at the end of the lease transfer of ownership occurs. The four criteria to classify a lease as a capital lease are:
1. The lease transfers ownership of the property to the lessee
2. The lease contains a bargain purchase option
3. The lease term is equal to 75% or more of the economic life of the leased property 4. The present value of the lease payments equals or exceeds 90% of the fair market value of the leased property (Weygandt & Kimmel & Kieso, 2003). The two primary classifications of capital or operating lease mentioned are from the perspective of the lessee. “Appendix No. 5, Determining Lessor’s Type of Lease – FASB, shows the evaluation process that can be used by a lessor to classify a lease” (Lee, 2003, pg. 12). From the lessor’s perspective a capital lease can be classified as a sales type lease, direct financing lease, or a leveraged lease. Each of the three types of lessor lease classifications can be defined differently. A sales type lease occurs when the fair value of the lease is different than its carrying amount and real estate is involved and ownership of the property is transferred, or when real estate is not involved and lease meets all four criteria under SFAS No. 13 and two additional lease criteria which are listed below: Collectibility of minimum lease payment is reasonably predictable No important uncertainties surround the amount of unreimbursable cost yet to be incurred by the lessor under the lease (Lee, 2003). The second lessor classification for a capital lease is direct financing lease. If the fair value and carrying amount of the lease are the same and the lease meets the two additional criteria mentioned in the definition of a sales type lease then the lease is classified as a direct financing lease. The third type of classification is the leveraged lease. In a leveraged lease a long term creditor intervenes to provide non recourse ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The decision regarding the equipment composition - Individual Essay”, n.d.)
Retrieved de https://studentshare.org/business/1391012-week
(The Decision Regarding the Equipment Composition - Individual Essay)
https://studentshare.org/business/1391012-week.
“The Decision Regarding the Equipment Composition - Individual Essay”, n.d. https://studentshare.org/business/1391012-week.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
mu
murphyruby added comment 3 months ago
Student rated this paper as
Helpful paper! Used it to complete an assignment for a business course. It was easy as ABC, for the first time in my life.
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Individual Assignment
The primary purpose of the establishment of accounting as a profession is to safeguard the people and their transactions once they plan to enter into business through purchasing stocks, lending capitals or financing projects (Chapin 1996). Since its founding, accountants have been keeping track of records and auditing the financial information of a particular business.
6 Pages(1500 words)Essay
English Composition II Unit 5 Individual Project
In fact, it can be considered a human want because of its fast growing societal evolution around the world. It provides a broad area of services to businesses and individual users with the World Wide Web being the highest emergent application. Although the internet is greatly advantageous to many people, some individuals disagree that it is a waste of time.
3 Pages(750 words)Essay
INDIVIDUAL ASSIGNMENT
For doing that companies are hiring marketers who are equipped with the succinct knowledge of engaging the masses, and who can manipulate and devise advertisements and provide companies edge over their competitors and also results in increasing their sales.
4 Pages(1000 words)Essay
English Composition II Assignment
I believe that these two methods of reading and marking best suit my reading style because by remembering keywords and phrases, I can somehow manage to connect them into a coherent thought or meaning relating to the topic being discussed in relation to those words.
3 Pages(750 words)Essay
International Business: Rebel Sport Limited and Group Companies
Today, rules of business success have changed. Innovation and the art of mastering the technological edge have emerged as the new competitive advantages. Information technology and improvements in global telecommunications are giving international firms more flexibility to shape their global strategies.
9 Pages(2250 words)Essay
Assignment: Anthropometry and Body Composition
To develop a universally applicable construct, several proxy variables for height are considered in the literature. A gender-specific validation study is performed and it is seen that none of them are performing well in
9 Pages(2250 words)Essay
Individual assignment
The approaches that are taken in the learning school of thought is basically the management of the organization, in this case Unilever, constantly need to be on the roll of finding out what steps and
4 Pages(1000 words)Essay
Individual assignment
As a result, strategy development has morphed into a trial and error approach that is laced with tests and discussions. This approach places more emphasis on
3 Pages(750 words)Essay
Individual assignment
Growth in income generation offers opportunity that trickle down to the satisfaction of the entire society along the description of both employment opportunities
7 Pages(1750 words)Essay
Individual Assignment
In the wake of the financial crisis, besides financial services industry automobile sector has been badly affected. The demand in matured and established markets has declined considerably since 2008 and the global demand
12 Pages(3000 words)Essay
Let us find you another Essay on topic The decision regarding the equipment composition - Individual assignment for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us