Case Study: Treatment of Leases-Current VS. New Lease Requirements and the Impact on Financial Ratios
QUESTIONS -
1. Describe the different reporting results and make the necessary adjusting entries to conform the financial statements to the new lease rules compliance for 2012.
2. In answering the following parts, keep in mind companies usually prefer to report higher net income and higher cash from operating activities (although accounting research has identified exceptions to this).
A. Prepare an income statement under the new lease rules for 2012.
B. Prepare balance sheet under the new lease rules on December 31, 2012.
C. Prepare a cash flow statement under the new lease rules for 2012.
3. Compute the following ratios for 2012, under both the current GAAP reporting lease rules and the new lease rules:
Current Ratio
Quick Ratio
Cash Ratio
Times Interest Earned
Debt to Capital Ratio
Debt to Shareholder Equity Ratio
Attachment:- CASE STUDY.rar