Earlier this year, Barracuda Company issued 5,000 employee stock options. Recently, 2,000 options were exercised at a price of $10 per share. To avoid dilution, Barracuda purchased 2,000 shares at an average price of $12 per share. Barracuda reported both transactions as financing activities in its cash flow statement. For analytical purposes, what adjustment is necessary to better reflect the substance of the stock repurchase?
Operating cash flow;Financing cash flow
A. Decrease $4,00;No adjustment
B. No adjustment;Increase $4,000
C. Decrease $4,000;Increase $4,000
If a lessee enters into a finance lease rather than an operating lease, it can expect to have a:
A. higher return on assets.
B. higher debt-to-equity ratio.
C. lower debt-to-equity ratio.
Which of the following statements regarding a direct financing lease is least accurate?
A. The principal portion of the lease payment is a cash inflow from investing on the lessor';s cash flow statement.
B. Interest revenue on the lessor's income statement equals the implicit interest rate times the lease payment.
C. The lessor recognizes no gross profit at the inception of the lease.
Which of the following statements about the impact of leases on the financial statements of the lessee is least accurate?
A. Net income is lower in the early years of a finance lease than an operating lease.
B. A finance lease results in higher liabilities compared to an operating lease.
C. Cash flow from investing is higher for a finance lease than an operating lease.