If a Company That Leases Equipment from Another Company Records

question 31

Multiple Choice

If a company that leases equipment from another company records these leases as operating leases rather than capital leases, its:

I. recorded liabilities will be lower.
II. recorded assets will be higher.
III. total cash flows will be higher.
IV. leverage ratios will be higher.

• A)I and III
• B)II and IV
• C)I only
• D)II, III, and IV

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Definitions:

Win-lose strategy

A competitive approach in negotiations where one party's gain is perceived as the other's loss.

Accommodation

The act of adjusting or adapting one's actions, decisions, or opinions to accommodate or meet the needs of others.

Intangibles

Non-material factors that can influence negotiations, such as reputation, relationships, or principles.

Bargaining mix

The range of topics, issues, or objectives that parties negotiate and discuss in an attempt to reach an agreement.