Chapter 9 Liabilities Leases Operating Lessee has the right to use the asset Lessor retains risks and rewards of owing Lessee records Rent Expense Capitol Lessee has the right to use the asset Lessee assumes risks and rewards of ownership Lessee capitalizes the leased asset and records a long term liability Capital Lease Criteria Transfer of title at end of lease Bargain purchase option Lease term 75 of useful life Present value of lease payments 90 of fair value of asset Pensions and Postretirement Liabilities Expense recorded while employees work for the company Cash contributed into pension plan assets Obligations grows for future payments to employees Underfunded Plan assets less than obligation Overfunded Plan assets greater than obligation PBS Liabilities Current liabilities Long term debt Other long term liabilities Accounts payable Accrued Liabilities Unearned Revenue Current portion of long term debt Total current liabilities
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