1. Prepare the lessee accounting illustrations Monet requested. How well do the thief accountant's assumed lease characteristics line up with the company's past lease term experience?

2. As a potential BonneSante investor or creditor, how would you view the liability for future lease payments BonneSante would have to record under the ED's lessee accounting proposals? Is it like regular bank debt? If not, what is it? Would you include at 100 percent of the recognized amount in a debt-to-equity ratio?

3. What role does management judgment play in determining the lessee right-of-use asset and lease liability amounts?

4. How might the ED's proposed lessor accounting influence, if at all the lessor's preferences for particular lease provisions in the BonneSante leases?

In August 2010, BonneSante S.A. was a small Paris, France, based chain of 22 "restauration rapide a la Francais" serving primarily young professionals who worked in a number of the city's larger office complexes. BonneSanta's most distinctive feature was that every food product it sold was organically raised or grown. BonneSante used leases to finance its retail locations as well as its small fleet of delivery trucks. Since substantially all of the risks and rewards of ownership associated with these leases remained with the lessors, in conformity with International Financial Reporting Standards (IFRS), the company accounted for its leases as operating leases. The company's warehouse/commissary was owned. It had been contributed free of any mortgages by the company's founder, Jean Monet, as part of his capital investment in the company. As a result, the liabilities listed on the company's balance sheet were primarily limited to current liabilities, such as accounts and taxes payable. BonneSante's early growth rate had been slow due to the difficulty of finding sufficient reliable organic food vendors who could meet the company's product needs on a continuing basis. In order to have a critical mass of organic product offerings to operate profitably, the company expanded its product offering beyond those offered by the typical restauration rapide. As a result, the company's shops offered a range of products normally sold by delicatessens, bakeries, and sandwich shops. This product selection gave the company the ability to serve its customers' take-out breakfast, lunch and dinner needs.