This assignment has been solved
Please help me.
Whereâ€™s the gain?
General Tools is seeking ways to maintain and improve cash
balances. As a company controller, you have proposed the sale and
leaseback of much of the companyâ€™s equipment. As seller-lessee,
General Tools would retain the right to essentially all of the
remaining use of the equipment. The term of the lease would be six
You previously convinced your CFO of the cash flow benefits of
the arrangement, but now he doesnâ€™t understand the way you will
account for the transaction. â€œI really had counted on that gain on
the sale portion of the transaction to bolster this periodâ€™s
earnings. What gives?â€ he wondered. â€œPut it in a memo, will you?
Iâ€™m having trouble following what youâ€™re saying to me.â€
Write a memo to your CFO. Include a discussion of each of these
Thank you in advance.