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Security devices Inc. needs additional office space to accommodate expansion. SDI wants to avoid income statement...

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Accounting

Security devices Inc. needs additional office space to accommodateexpansion. SDI wants to avoid income statement effects that woulddisrupt its attempt to “smooth” income over time. Which leaseclassification would management prefer? Explain.

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4.5 Ratings (828 Votes)
Ans Here since Security devices Incs management does not want to take hit over its income statement hence they should go for Capital lease instead of operating lease since operating lease are used basically for short term period    See Answer
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Security devices Inc. needs additional office space to accommodateexpansion. SDI wants to avoid income statement effects that woulddisrupt its attempt to “smooth” income over time. Which leaseclassification would management prefer? Explain.

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