1, American Movieplex, a large movie theater chain, leases most of its theater facilities. In conjunction with recent operating leases, the company spent $28 million for seats and carpeting. The question being discussed over breakfast on Wednesday morning was the length of the depreciation period for these leasehold improvements. The company controller, Sarah Keene, was surprised by the suggestion of Larry Person, her new assistant. Keene: Why 25 years? Weve never depreciated leasehold improvements for such a long period. Person: I noticed that in my review of the back records. But during our expansion to the Midwest, we dont need expenses to be any higher than necessary. Keene: But isnt that a pretty rosy estimate of these assets actual life? Trade publications shows an average depreciation period of 12 years How would increasing the depreciation period affect American Movieplexs earnings? Does revising the estimate pose an ethical dilemma? Who would be affected if Persons suggestion is followed? 2. The basic concept of substance over form influence lease accounting. Explain in detail how it does affect lease accounting