the statement 4th to the last one:
“When a lessee reportes a lease as an operating lease rather than a finance lease, it usually appears more profitable in early years of the lease and less so later, and it appears more solvent over the whole period”
why i thik the opposite is corret? if check the statement in page 106, it is capitalize expense will increase the profit during capializing year….. etc.
thanks.作者: cfalevel2011 时间: 2013-4-8 20:09
remember on the income statement which measures profit capital leases have depreciation and interest paid. in the early years interest + depreciation operating lease payment. this reduces profit.
capital expenses and capital leases are different. capital expenses are expensed slowly over a period of time and create assets, increasing profit in the year of capitalization.
