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The Park Company Owns 80% of the Outstanding Common Stock

Question 2

Essay

The Park Company owns 80% of the outstanding common stock of the Sea Company.Park is about to lease a machine with a 5-year life to the Sea Company.The lease would begin January 1, 2016.
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Required:
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Explain the adjustments that will be required in the consolidation process if each of the following occurs.
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a.The lease is an operating lease.?
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b.The lease is a direct financing lease with a bargain purchase option.?
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c.The lease is a sales-type lease with a bargain purchase option.?

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