Accounting / July 19, 2018 / Pearl Bailey
The legal form of a capital lease is that the business never owns the asset, however because under a capital lease the rights and risks of ownership are transferred to the business, for accounting purposes the substance of the agreement is reflected and the asset is treated like any other asset, as if it had been purchased by the business.
Net Working Capital It implies the surplus of current assets over current liabilities. A positive net working capital shows the company’s ability to cover short-term liabilities, whereas a negative net working capital indicates the company’s inability in fulfilling short-term obligations.
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