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Homework answers / question archive / The Rousch Racing Company is in the business of building NASCAR race cars

The Rousch Racing Company is in the business of building NASCAR race cars

Business

The Rousch Racing Company is in the business of building NASCAR race cars. They also have an engineering department that builds components for other racing teams, as well as for specialty cars built for major manufacturers such as Ford Motor Company. Rousch has three lease related accounts on their books as follows:

Leasehold Improvement
Balance $4,583,000
Last Year $3,600,000

Leased Equipment
Balance $1,287,000
Last Year $832,000

Lease Expense
Balance $624,000
Last Year $515,000

Required
1. Identify the nature of each of the listed accounts; that is, asset, liability, and expense.
2. What would cause the accounts to increase during the year?
3. What is the relationship between the first two accounts and the lease expense account?

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