Question: Discuss the economic consequences issues that are present in each of the following transaction situations.

a. SFAS No. 13 allows lease contracts to be established so that the transaction can usually be set up as an operating lease rather than a capital lease.

b. When SFAS No. 19 was passed, medium-sized petroleum exploration firms campaigned hard to set it aside. SFAS No. 19 would have allowed successful efforts only, whereas the lobbying firms wanted an unrestricted choice between full costing and successful efforts.

c. A securities industry group objected to part of APB opinion No. 10, which would have required that all convertible debt be broken down into debt and equity portions at the time of issue. The debt portion (bonds payable plus premium or minus discount) would be booked at the effective rate without the conversion privilege with the equity portion credited to paid-in capital. The industry group was pleased by APB Opinion No. 14, which did not break out the equity portion of convertible debt except if detachable stock warrants were issued. Why was the securities industry group (which represented investment bankers who floated large loans for industry) unhappy with Opinum No. 10 and pleased with Opinion No. 14?

d. SEAS ..Yo. 87 does not show the full pension obligation or liability in L.1.ebalance sheet (although a "minimum" liability may be present)

e. SEAS Sec. 96 made it much more difficult to recognize deferred tax assets 2S opposed to deferred tax liability (a more even-handed treatment was used in recognizing deferred tax assets and liabilities in SFAS So. 109, which superseded SE4.S No. 96).

f. The Ebb tried to include the cost of stock options as an expense but it "h"2S prevented from doing so by vociferous opposition from the business community.