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Carey Company is considering the acquisition of additional equipment for the business and is analyzing the...

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Accounting

Carey Company is considering the acquisition of additionalequipment for the business and is analyzing the opportunity topurchase versus lease the equipment. The staff at Carey Co. fullyunderstands the accounting for a purchase of equipment but is notfamiliar with the new rules related to lease accounting (ASC 842).It is your task to advise Carey Company whether to purchase orlease additional equipment for their business. In your discussion,you should address the following questions at a minimum.

-What is included in the measurement of a lease liability?

-What is included in the measurement of the right-of-useasset?

-What considerations determine the term of a lease?

-If Carey Company engages in the lease, how would an agreementthat they make up any residual value deficiency at the end of thelease term (attributable to damage or extraordinary wear and tear)affect the minimum lease payments?

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