Accounting for Leases: Operating or Capital – Does It Really Matter?

Accounting for Leases: Operating or Capital – Does It Really Matter?

Karen Foust, Christine Smith, Beauregard Parent Journal of Case Studies
November 01, 2015
SKU: BUS-00587

Region of the world: North America
Topic: Strategy & General Management
Page length: 1
Keywords: Lease accounting, financial statement analysis, international financial reporting standards
Price: Free
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A top accounting student was struggling with the concept of capital leases versus operating leases. After looking at the financial statements and notes to the financial statements of two airline companies, she realized that operating leases result in large commitments by companies that are not reported as liabilities on the balance sheet. The student decided to restate the financial information as if all lease commitments were reported as liabilities.

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