So is sales lease the same as sales lease back? I thought i read that sales lease back can either to capital or operating.. Maybe I am confusing things..
Kenada, no they're not the same thing. A sales leaseback is when the entity sells the item and then leases it from the entity they sold it to. In your case above, Tell is leasing the item with intent to buy.
Using Ninja MCQ, NINJA Notes, Audio, Flashcards and BLITZ, and 2014 Wiley Text
FAR - (61,63)
AUD - (68)
Keep Calm and RTMFQ
Accountant, what is best in life? To crush your MCQs, see them driven before you, and hear the lamentation of their SIMS!
@kenada – they are not the same thing. sales leaseback you are selling and leasing back, and based on a few tests you determine how much gain you may have to recognize
Okay warrants question makes sense now. Expense of 32000 was already recorded at the same time when estimated liability, at the end of Y1, I forgot how it works
The City of Middleton maintains a vehicle garage. This activity services and repairs all of the vehicles owned by the government. The garage is reported as an Internal Service Fund because a charge is performed for all work done at an amount equal to 10 percent above cost. Most of the work performed in the garage relates to the servicing of the city's bus service although some work is carried out on vehicles used in other activities. Because there is a user charge to the public, the bus service is recorded by the city as a business-type activity. In connection with the preparation of government-wide financial statements, which of the following statements is true?
A This Internal Service Fund will be included as a governmental activity.
B This Internal Service Fund will be included as a business-type activity.
C This Internal Service Fund will be included as a component unit.
D This Internal Service Fund will not be included in the government-wide financial statements.
I also chose A but the answer says B….Im confused…lol
Because there is a user charge for the services performed, Internal Service Funds are included by a state or local government as a Proprietary Fund. However, on government-wide financial statements, Internal Service Funds are reported based on the activities that benefit from their work. Here, the bus service (a business-type activity) is the primary beneficiary of the work of the vehicle garage. Because the main connection is with a business-type activity, the Internal Service Fund is also reported as a business-type activity.
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