Park Owns an 80% Interest in the Common Stock of Stable

question 5

Multiple Choice

Park owns an 80% interest in the common stock of Stable Company. Park leased a machine to Stable under a 5-year, direct financing lease with a bargain purchase option. The lease term began January 1, 20X4. The impact of the lease on the Noncontrolling share of income for 20X4:

• A)is an increase.
• B)is a decrease.
• C)is zero.
• D)cannot be determined from the information given.

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Definitions:

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services provided on credit.

Notes Receivable

Financial assets representing money owed to a company by customers or others, usually evidenced by a written promissory note.

Accounts Receivable

Monies owed to a company by customers for products or services that have been delivered or used but not yet paid for.

Aging the Accounts

The process of categorizing and reviewing accounts receivable based on the length of time an invoice has been outstanding.