Hi, Had a small confusion… Would appreciate if some1 cud help clarify the below:
Reading 27, Solution to EOR Q no : 3 on page 464 (Book 2) says that capitalisation of lease does not affect equity.
But isnt it that Net income changes because operating lease payment is added back to Old net income and Depn and Interest exp on finance lease is deducted from old net income to arrive at new net adjusted income.
These adjustments definitely alter the net income , Retained earnings and hence Equity value right ??