Hatfield has begun recording all new equipment leases on its books as operating leases, a change from
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Hatfield has begun recording all new equipment leases on its books as operating leases, a change from its consistent past use of capital leases, in which the present value of lease payments is recognized as a debt obligation. What is the most likely motivation behind Hatfield’s change in accounting methodology? Hatfield is attempting to:
a. Improve its leverage ratios and reduce its perceived leverage.
b. Reduce its cost of goods sold and increase its profitability.
c. Increase its operating margins relative to industry peers.
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