Capitalizing Costs vs. capitalized leases.........

CFA Level I FRA
#1

I can definitely imagine the exam having quesitons, where they try to trick you up on these.

For Capitlized expenses, you have lower income, and higher assets and equity.

For Capital leases, you have higher debt, CFO, assets, liabilities, lower net income (early years).

Anything else that is a big difference that you can think of? or can imagine being trick on the exam?

Thanks!

#2

Capitalisation results in higher income in early years, not lower.

#3

got it, so that is one of the big differences…

#4

You would be better off knowing the key differences between Capital Leases and Operating Leases…

IMO…