Question
Topic: Current accounting for leases requires that certain leases be capitalized. For capital leases, an asset and the associated liability are recorded. Whether or not
Topic: Current accounting for leases requires that certain leases be capitalized. For capital leases, an asset and the associated liability are recorded. Whether or not the lease is capitalized, the cash flows are the same. The rental payments are set by contract and are paid over time at equally spaced intervals.
Question: If one of the objectives of financial reporting is to enable investors, creditors, and other users to project future dash flows, what difference does it make whether we report the lease as a liability or simply describe its terms in footnotes? Discuss in depth
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