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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Investments

ISBN: 9781259277177

11th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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