Final answer:
Acquiring equipment with a long-term lease will lead Daffodil Corp. to record both an asset and a liability on the balance sheet and will impact cash flows due to the lease payments. The transaction also influences the income statement through expensed lease payments and must comply with accounting standards such as IFRS or GAAP.
Step-by-step explanation:
When Daffodil Corp. acquires new equipment with a long-term lease, this transaction will likely result in the company recognizing a right-of-use asset and a lease liability on its balance sheet. The lease liability reflects the obligation to make lease payments, and the right-of-use asset represents the right to use the leased equipment over the lease term. This transaction affects both the balance sheet and the income statement, as lease payments are expensed over the period.
The lease will also have implications for the company's cash flows, as regular lease payments will need to be made, thus impacting operating cash flows. Additionally, the lease arrangement must adhere to financial reporting standards, such as the International Financial Reporting Standards (IFRS) or the Generally Accepted Accounting Principles (GAAP) depending on the jurisdiction, which will dictate the specific accounting treatment.