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It is a case with key issue for ACC research memo. Need advise for Brief Conclusion,...

It is a case with key issue for ACC research memo. Need advise for Brief Conclusion, Analysis, Conclusion, Financial Statement and Disclosure Impacts. And need FASB Codification if it is possible. Thank you!

We need cash for the taco stand, so have decided to do a ‘reverse mortgage’ on our taco truck. A bank will pay us $1000/month for the next 10 years. We continue to own and operate the truck, but at the end of the ten years, ownership goes to the bank. If we go out of business before then, ownership also goes to the bank. We cannot sell the taco truck under this reverse mortgage. How is the $1000 presented in the statement of cash flows? Sale or loan?

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Answer: 1000 $ will be treated as loan under reverse mortgage from Bank, since there is no sale till the end of 10 years. After 10 years, Loan will be squared off by transferring ownership of the truck.

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