Advantages and Disadvantages of Communication Technology

Therefore in this agreement the equipment is going to be partially financed by the lessor (Northwest) through a third-party financial institution (Lender) and act as a leveraged lease, wherein the lending company holds the title to the leased asset, while the lessor creates the agreement with the lessee (BNRR) and collects the payment for the use of the equipment. Therefore the lease in this case will be regarded as a financial decision for BNRR

• Lessor may require the lessee to perform general repairs and maintenance on the leased premises.

31.  Current liabilities are amounts that must be paid within a short period of time, usually less than a year.  TRUE

Case 11-6 deals with Lessee Ltd., a company that operates in Britain and uses IFRS. The question in this case is how to classify a lease that Lessee, Ltd. acquired from Lessor Inc. The accounting standard that deals with leases under IFRS is IAS 17. IAS 17 was originally issued in September 1982 and was reissued in December 2003. It classifies leases as either finance leases or operating leases. Finance leases make it so that the lessee recognizes an asset and a liability and the lessor recognizes a receivable, basically transferring all the risks and benefits of ownership. Under operating leases, the lessor still recognizes the asset and the lessee recognizes an expense.

(c) The term of the lease is equal to 75% or more of the estimated economic life of the leased asset.

ASC 840-10-25-1 presents the criteria the Lessee will consider as part of classifying the lease. Each criterion will be analyzed separately to determine if it meets the classification as a capital lease. ASC 840-10-25-1a states:

Conversely, insufficient capacity or inefficient computing resources can stunt growth. The company that waits until it can afford to purchase the right hardware and software may find itself unable to remain competitive. Moreover, although businesses would rather keep their credit lines open for unforeseen events, they must sometimes act quickly to adopt economically attractive new technology. Before we examine the attributes which make leasing attractive to so many companies we need to review two most common types of leasing arrangements.

Long-term liabilities: Note Payable with total balance due in 5 years and Mortgage Loan with payments made monthly over 5 years.

9. Debt service coverage = (Net Income + Interest + Depreciation) in Statement of Operations/ Interest + Principal Payments ($10 million assumed for this assignment)

Analysis of Issue 2: Argue for treating the lease as an operating lease and discuss the ethical implications of selecting this alternative as opposed to the capital

The nature of lease liability will be more like a loan with a principal and interest. In early years payments include more portion of interest and a relatively smaller portion of principal whereas in later years payments include more of the principal than interest. This treatment of lease will gradually reduce the balance sheet liability. (IFRS_ 16_Effect Analysis, 2016)

The US accounting standards under Financial Accounting Standard 13 classified leases into Capital and Operating Leases. While Capital Leases transferred the lessee substantially all the risks and rewards incidental to ownership of the leases asset, it had to follow the criterion:

As for primary measurement, it was cautiously decided that the lessee would record the asset at cost, which would equal the present value of the lease payments discounted at the lessee 's incremental borrowing rate. The obligation to make rent payments would be recorded at the present value of the lease payments, discounted at the lessee 's incremental borrowing rate (Ochoa, 2011).

leased asset have been transferred from the lessor to the lessee. Under EAS, the leased asset is recognized in the lessor

The standard of IAG Limited record lease transaction in their financial statement is that many leases entered into are operating leases, where the lesser retains substantially all the risks and benefits of ownership of the leased items. Most of the lease arrangements are entered into as lessee for whom the lease payments are recorded as an expense on a straight line basis over the term of the lease. Certain sublease arrangements are entered into as the lesser for whom the lease payments are recognised as revenue on a straight line basis over the term of the lease. However, Lease incentives relating to the agreement of a new or renewed operating lease in IAG Annual Report in 2014 are recognised as an integral part of the net consideration agreed for the use of the leased asset. Operating lease incentives received are initially recognised as a liability, are presented as trade and other payables, and are reduced later through recognition in profit or loss account as an integral part of the total lease expense (lease payments are allocated between rent payment and