The Rousch Racing Company is in the business of building NASCAR race cars. They also have an engineering department that builds components for other racing teams, as well as for specialty cars built for major manufacturers such as Ford Motor Company. Rousch has three lease-related accounts on their books;
Leasehold Improvement Balance $4,583,000 Last Year 3,600,000
Leased Equipment Balance 1,287,000 Last Year 832,000
Lease Expense Balancfe $624,000 Last Year 515,000
Identify the nature of each of the listed accounts; that is asset, liability, and expense.
What would cause the accounts to increase during the year?
What is the relationship between the first two accounts and the lease expense account?
1. In business and accounting an asset is any economic resource controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained. Examples include cash, equipment, buildings, and land. So Leasehold ...
This solution identifies listed accounts, identifies determinants and explains the relationships between accounts.