Backhoe Partners (BP) sells each of its backhoes for $175,000 with an expected economic life of 10 years. The company also leases them directly to construction companies with good credit. If Construction Group (CG) leases the equipment from BP, the relevant interest rate is 10% and the lease payments will be $4,000 per month for four years. CG has purchased equipment in the past by financing through Prime Finance. Assuming that CG decides to lease the equipment, BP should treat the lease as a(n):
A. Direct financing lease.
B. Operating lease.
C. Sales-type lease.
第1题
finance lease rather than as an operating lease will be:
A. Unchanged total lease expense over the lease term.
B. Lower operating cash flows during the life of the finance lease.
C. Lower operating profit (margin) in the early years of the finance lease.
第2题
s of $20,541. The present value of the lease liability is approximately $100,000 based on a 10% discount rate. The interest portion of the first payment is closest to:
A. $10,000.
B. $13,340.
C. $14,200.
第3题
year and also has significant number of operating leases. Which of the following statement is the least accurate?
A. The company’s financial statements must be adjusted before the analyst compares this company to other companies in its industry.
B. Despite the off-balance sheet nature of take-or-pay contracts and operating leases, an attempt to determine the actual financial position of the company can be garnered from the footnotes.
C. The take-or-pay contracts and operating leases mean that this company has much higher business risk than similar companies that do not use off-balance sheet financing techniques.
第4题
n the reporting year. The lease requires a year-end payment of $175,000 for 10 years. In the second year of the lease, the company reported the EBIT of $450,000. Assuming a 7% imputed interest rate on the lease, the firm’s interest coverage ratio in the second year is closest to:
A. 4.3X
B. 5.2X
C. 5.6X
第5题
A manager whose compensation is tired to improving the firm’s inventory turnover most likely has an incentive to:
A. overstate assets.
B. understate earnings.
C. overstate working capital.
第6题
While motive and opportunity both can lead to accounting fraud, a third important contributing factor is:
A. poor financial controls.
B. a justification of the fraudulent actions.
C. pressure to meet earnings expectations.
第7题
The ratio of operating cash flow to net income (the cash flow earnings index) would least likely be an “accounting red flag” when it is:
A. less than one.
B. declining over time.
C. highly variable.
第8题
Which of the following trends may signal the beginning of a liquidity crisis for an entity?
A.A shift from operating debt to financing liabilities.
B.An increase in trade credit and decrease in retained earnings.
C.A shift from operating debt to increases in owners’ contributed capital.
第9题
Which of the following transactions is least likely to increase a company’s reported cash from operations?
A.Securitizing accounts receivable
B.Delaying payments made to suppliers
C.Using short-term debt to reduce an existing account payable
第10题
Which of the following is the simplest way for a company to increase its reported operating cash flow?
A. Record sales on a bill-and-hold basis.
B. Slow down the rate of payment to suppliers.
C. Use a third party financial institution to pay suppliers.
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