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Leasing is often referred to as off-balance sheet financing because of the way that the transaction is treated and reported in financial statements. Under International
Leasing is often referred to as off-balance sheet financing because of the way that the transaction is treated and reported in financial statements. Under International Accounting Standards (IAS 17), which of the following statements is true? Leased assets should be reported as current assets on the balance sheet. The present value of all future lease payments should be reported as assets on the balance sheet. Assets leased under financial or capital leases should be reported as fixed assets on the balance sheet. The present value of all past lease payments should be reported as a liability on the balance sheet. Consider the following statement on capital leases: Suppose that instead of issuing new debt to finance a new fixed asset, a firm enters into a lease agreement. As a result of entering into the new lease agreement, the firm's financial leverage increases. Such a financial lease should be treated as a loan and capitalized. Identify if the preceding statement is true or false. True False
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