Intermediate Accounting Vol 2 4th

Edition Lo Solutions Manual

Go to download the full and correct content document:
https://testbankfan.com/product/intermediate-accounting-vol-2-4th-edition-lo-solutions
-manual/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...

Intermediate Accounting Vol 2 Canadian 3rd Edition Lo

Solutions Manual

https://testbankfan.com/product/intermediate-accounting-
vol-2-canadian-3rd-edition-lo-solutions-manual/

Intermediate Accounting Vol 2 Canadian 2nd Edition Lo

Solutions Manual

https://testbankfan.com/product/intermediate-accounting-
vol-2-canadian-2nd-edition-lo-solutions-manual/

Intermediate Accounting Vol 1 4th Edition Lo Solutions

Manual

https://testbankfan.com/product/intermediate-accounting-
vol-1-4th-edition-lo-solutions-manual/

Intermediate Accounting Vol 2 Canadian 3rd Edition Lo

Test Bank

https://testbankfan.com/product/intermediate-accounting-
vol-2-canadian-3rd-edition-lo-test-bank/
Intermediate Accounting Vol 2 Canadian 2nd Edition Lo
Test Bank

https://testbankfan.com/product/intermediate-accounting-
vol-2-canadian-2nd-edition-lo-test-bank/

Intermediate Accounting Vol 1 4th Edition Lo Test Bank

https://testbankfan.com/product/intermediate-accounting-
vol-1-4th-edition-lo-test-bank/

Intermediate Accounting Vol 1 1st Edition Lo Solutions

Manual

https://testbankfan.com/product/intermediate-accounting-
vol-1-1st-edition-lo-solutions-manual/

Intermediate Accounting Vol 1 Canadian 3rd Edition Lo

Solutions Manual

https://testbankfan.com/product/intermediate-accounting-
vol-1-canadian-3rd-edition-lo-solutions-manual/

Intermediate Accounting Vol 1 Canadian 2nd Edition Lo

Solutions Manual

https://testbankfan.com/product/intermediate-accounting-
vol-1-canadian-2nd-edition-lo-solutions-manual/
 CHAPTER 17
Accounting for Leases

CPA COMPETENCIES ADDRESSED IN THIS CHAPTER

1.1.2 Evaluates the appropriateness of the basis of financial reporting (Level B)
a. Fundamental accounting concepts and principals (qualitative characteristics of
accounting information, basic elements)
b. Methods of measurement
c. Differences between accrual accounting compared to cash accounting
1.2.2 Evaluates treatment for routine transactions (Level A)
d. Property, plant, and equipment
h. Long-term liabilities
n. Leases
1.3.2 Prepares routine financial statement note disclosure (Level B)

LEARNING OBJECTIVES
17-1. Apply the criteria for lessors for classifying leases as finance (capital) or operating
leases, and apply the appropriate accounting method.
17-2. Analyze a lease to determine the present value of lease payments, the interest rate
implicit in the lease, and the lease payments required from the lessee.
17-3. Apply the appropriate accounting method for lessees’ right-of-use assets.
17-4. Analyze a lease to determine whether practical expedients are available to lessees and,
if available, apply the appropriate accounting methods.
17-5. Apply the presentation and disclosure requirements applicable to leases.
17-6. Describe the nature of sale and leaseback transactions and account for these
transactions.

OVERALL APPROACH
IAS 17 – Leases, the predecessor standard for leasing, was for entities to report the
economic substance of lease transactions rather than their legal form on their financial
statements. There was a concern that lessees could classify leases as operating leases,
thereby keeping a considerable portion of their assets and corresponding liabilities off-
balance-sheet. The IASB addressed this concern and substantively revised the leasing

Copyright © 2020 Pearson Canada Inc. 36

standard and replaced IAS 17 – Leases with IAS 16 – Leases. The new standard (IAS 16)
ensures that virtually all right-of-use assets and the associated liabilities are reported by
lessees on their balance sheets.

This chapter begins with the underlying economics of leasing—the costs and benefits of
leasing arrangements. This foundation is important for two reasons. First, the costs and
benefits of leasing vary with the extent of the transfer of risks and rewards, which is the
main criterion for the classification of leases for accounting purposes. Second, it helps
students to see the larger picture rather than focus narrowly on the short-term financial
statement outcomes. They will then be able to make better decisions when they move into
the business world. This approach necessarily requires integrated discussions of the lessor
and lessee. It is detrimental to students’ understanding to treat each side of the lease in
completely separate discussions because a lease is a negotiated agreement between two
parties.

KEY POINTS
Economics of leasing: From the lessee’s perspective, leases offer a number of benefits
(separate from the accounting outcomes), but these benefits are significantly offset by the
agency cost of leasing, which relates to the threshold concept of information asymmetry
introduced in Chapter 1. The separation of ownership and control of the leased asset
creates a moral hazard, a cost that must ultimately be factored into the lease payments by
the lessor.

This agency cost of leasing can be significantly affected by a number of factors:

 inherent characteristics of a leased asset;
 incentives of the lessee to maintain the asset;
 regulation;
 conditions specified in the lease contract; and
 the length of the lease contract.

Relating to the last factor, the shorter is the lease relative to the asset’s total useful life,
the greater is this cost. Students must, therefore, bear in mind that shortening the lease
term (e.g., to obtain operating lease treatment) will have real cash flow consequences in
the form of higher lease payments.

It is important to demonstrate how a lessor would go about pricing a lease. The lessor
must determine the stream of lease payments that would allow it to obtain its required
rate of return on the cost of the asset. This exercise can be turned around to show how
one can determine the interest rate implicit in the lease. The “Solver” tool in Excel is
useful for this purpose (see Exhibit 17-3, p. 845). Without this demonstration, students
will not know what is meant to “infer” the implicit rate, which is the “discount rate at
which the sum of discounted cash flows from the lease expected by the lessor (including
any residual value) equals the fair value of the leased asset plus any indirect costs of the
lessor” (p. 844).

Copyright © 2020 Pearson Canada Inc. 37

Classification of leases – lessor: The criterion for lease classification is whether there is a
transfer of substantially all the risks and rewards of ownership.

Additional indicators of whether there is such a transfer also use general terms with no
quantitative guideline in IFRS 16, while ASPE uses specific quantitative guidelines.
These indicators include whether: there is transfer of ownership or bargain purchase
option (BPO); the lease covers a “major part” of the asset’s economic life; the present
value of minimum lease payments (MLP) comprises “substantially all” of the fair value
of the leased asset. Land leases consider only the first of these three criteria. ASPE
provides quantitative guidelines for the latter two criteria: 75% of the asset’s life and 90%
of MLP. There are a number of other indicators of the transfer of risks and rewards
enumerated in IFRS 16. However, it is important to bear in mind that these indicators are
only support for the overall judgment as to whether there is a transfer of substantially all
the risks and rewards of ownership.

Exhibit 17-4 (p. 846) summarizes the accounting required at each of the three stages of a
lease (at the start, during, and at the end) from the lessor’s perspective.

Accounting for the lease payments for the lease receivable requires a lease amortization
schedule, such as that shown in Exhibit 17-14a (p. 861).

In the earlier discussion of lease classification, some students may have wondered why
the accounting standards use guidelines that are substantially lower than 100% and terms
such as “major part” (i.e., why do the standards try to classify more leases as finance
leases?). The answer relates to economic consequences of accounting choice from
Chapter 1 and the quality of earnings from Chapter 3. Since lessees generally prefer
operating lease treatment, they will use their discretion to try to obtain that treatment. At
management’s discretion are judgments about the expected useful life and fair value of
the leased asset; overstatements of these two variables will result in a lease having lower
percentages of the useful life and MLP. Furthermore, useful lives involve estimates about
the future, which is inherently uncertain, while fair values are estimates about the asset
today, so the difference in management’s ability to exaggerate useful lives and MLPs
helps to explain why the former uses “major part” and 75% while the latter uses
“substantially all” and 90%.

Presentation and disclosure of leases – lessor: The lessor needs to determine the current
and non-current portions of its lease receivables as the two parts must be reported
separately on the company’s statement of financial position.

Accounting for leases – lessee: IFRS 16 requires the lessee to account for the lease
contract in the same manner irrespective of whether the lessor accounts for the lease as an
operating lease or finance lease. Lessees must employ a capitalization approach in which
they recognize a right-of-use asset and a lease liability for virtually all leases. The IASB
did provide limited exceptions referred to as practical expedients, which permit lessees
to adopt simplified rules of accounting for leases.

Copyright © 2020 Pearson Canada Inc. 38

For a lessee that has a finance lease, it is important to remember to account for both the
obligation and the asset; students often forget to depreciate the leased asset. Likewise, a
lessor who has an operating lease also needs to account for the asset’s depreciation in
addition to the lease payments.

Presentation and disclosure of leases – lessee: The presentation of leases requires some
attention because the lessee must split the lease between current and non-current
liabilities. For a finance lease, the current amount is the amount of principal due within a
year, and past interest accrued but not yet paid.

Accounting for sale and leaseback transactions: A sale-leaseback looks like two separate
transactions but the same two parties are involved in the sale-purchase and subsequent
lease contract. Substance over form and the prevention of earning management result in
sale-leasebacks being essentially treated as a single composite transaction and the
deferral of any gains on sale because those gains could be artificial.

Regarding sale-leasebacks, note that the chapter has deliberately left out some details that
are contained in IFRS. In particular, according to IFRS 16, in a sale-leasebacks that is an
operating lease, if the sale price can be established to be at fair value (or less), any gains
or losses shall be recognized immediately. This treatment is sensible to the extent that the
transfer of ownership in the sale is more than the reverse transfer of risks and rewards in
the operating lease. However, allowing the recognition of gains in such cases creates
strong incentives for earnings management and managerial myopia achieved by selling
assets for accounting gains and leasing those assets back using operating leases.

Substantive differences between relevant IFRS and ASPE: One of the more confusing
issues for students is the treatment of residual values, because it surfaces in three
different places: (i) pricing of the lease or the calculation of the implicit rate; (ii) lease
classification; and (iii) lease amortization schedule. When a lessee guarantees the residual
value, it is clear that the residual value should be included in all three places. It is the
unguaranteed residual value (URV) that creates the problems for students. Lessors
include unguaranteed residuals values in (i) and (iii) but not (ii). Lessees include
unguaranteed residuals values only in (i).

To avoid mindless memorization of the treatment of unguaranteed residual value (URV),

it is helpful to partition the explanation not by lessor/lessee, but by the three places in
which these values potentially appear.

The lessor must include both cash flows expected from the current lessee and any cash
flows from later rentals or the sale of the asset after the end of the current lease.
Therefore, the lessor must include the URV in setting the price. The example of a hotel
room is useful here: if the hotel owner excludes the URV, then the hotel room price
would be astronomically high to cover the cost of the room in a single rental. The pricing
of the lease involves contracting/negotiation between the lessor and lessee, so both sides
use the same figures.

Copyright © 2020 Pearson Canada Inc. 39

For lease classification, what is unguaranteed is clearly not part of the “minimum,” so
URVs do not enter into MLPs for both parties.

Lease amortization schedules will differ for the lessor and lessee when the leased asset
has an unguaranteed residual value. The rationale is that the lessor will have the asset at
the end of the lease, so the amortization schedule needs to arrive at that expected value at
the end of the lease; in contrast, the lessee has no further obligations at the end of the
lease, so the lease amortization schedule needs to arrive a zero at the end.

USE OF END-OF-CHAPTER PROBLEMS AND CASES

In addition to lectures, discussion of some of the end-of-chapter problems and cases will
help students apply the concepts. The following table identifies the suggested problems
and cases that can be used in class, and problems and cases that can be used for
homework assignments. (Depending on the time allocation between lectures and
examples, it may not be feasible to cover all of the suggested items.)

Copyright © 2020 Pearson Canada Inc. 40

Table 17-1:
Summary of learning objectives, chapter content, and suggested problems and cases
Suggestions Suggestions
L.O. for in-class for
number Learning objective Pages discussion assignments
17-1. Apply the criteria for lessors for 897 P17-1 P17-2
classifying leases as finance (capital)
or operating leases, and apply the
appropriate accounting method.
17-2. Analyze a lease to determine the 902-903 P17-17 P17-18
present value of lease payments, the
interest rate implicit in the lease, and
the lease payments required by the
lessee.
17-3. Apply the appropriate accounting 905 P17-27 P17-28
method for lessees’ right-of-use
assets.
17-4. Analyze a lease to determine whether 908 P17-34 P17-35
practical expedients are available to
lessees and, if available, apply the
appropriate accounting methods.
17-5. Apply the presentation and disclosure 906-907 P17-30 P17-31
requirements applicable to leases.
17-6. Describe the nature of sale and 912-913 P17-46 P17-48
leaseback transactions and account
for these transactions.
-- Integrative 911-912 P17-43 P17-44
915-916 Case 1 Case 2

Case 1 is a simulated company whose bank has expressed concerns about DLI’s financial
position. In an effort to alleviate these concerns, the president of DLI is considering a
sale-leaseback transaction to improve the financial statements. Students must analyze the
financial statement consequences of the proposed transaction and recommend whether
DLI should undertake the transactions.

Case 2 is broader in scope than Case 1. PDQ is considering two alternative leasing
arrangements to increase the size of its truck fleet. Management is concerned (perhaps
unjustifiably) about investors’ perception of the company’s leverage. In their analyses
and recommendations, students should consider not only the financial statement
implications, but also the net present value (NPV) of the two options and the likelihood
that investors will be able to see the substance of the transactions regardless of the form
of presentation on the financial statements.

Copyright © 2020 Pearson Canada Inc. 41

Another random document with
no related content on Scribd:
Box 329, Lynn, Mass. Although you may obtain these books any
time during the next twenty years, it may be best to send at once so
as to lose no opportunities.
 Statistics of the Globe.
The earth is inhabited by about 1,500 million of inhabitants, viz:
Of the Caucasian race 460,000,000
Of the Mongolian 550,000,000
Of the Ethiopian 190,000,000
Of the Malay 300,000,000
Of the American Indian 1,000,000
There are about 3,064 languages spoken in the world, and its
inhabitants profess more than 1,000 different religions. The number
of men is about equal to the number of women. The average of
human life is about 33 years. One-quarter die previous to the age of
7 years, one-half before reaching 17, and those who pass this age
enjoy a felicity refused one-half of the human species. To every
1,000 persons, only 1 reaches 100 years of life; to every 100, only 6
reach the age of 65; and not more than 1 in 500 lives to 80 years of
age. There are on the earth 1,000,000,000 inhabitants; of these
33,333,333 die every year, 91,824 every day, 3,730 every hour, and
60 every minute, or 1 every second. The married are longer lived
than the single, and above all, those who observe a sober and
industrious conduct. Tall men live longer than short ones. Women
have more chances of life in their favor previous to their being 50
years of age than men have, but fewer afterward. The number of
marriages is in the proportion of 75 to every 1,000 individuals.
Marriages are more frequent after the equinoxes, that is, during the
months of June and December. Those born in the spring are more
robust than others. Births and deaths are more frequent by night
than by day. The number of men capable of bearing arms is
calculated at one-fourth of the population.
 The Origin of Postage Stamps.
The origin of the postage stamp had a tinge of romance in it. It was
thirty-seven years ago that Rowland Hill, while crossing a district in
the north of England, arrived at the door of an inn where a postman
had stopped to deliver a letter. A young girl came out to receive it;
she turned it over and over in her hand and asked the price of
postage. This was a large sum, and evidently the girl was poor, for
the postmaster demanded a shilling. She sighed sadly and said the
letter was from her brother, but that she had no money, and so she
returned the letter to the postman. Touched with pity, Mr. Hill paid the
postage and gave the letter to the girl, who seemed very much
embarrassed. Scarcely had the postman turned his back, when the
young inn-keeper’s daughter confessed that it was a trick between
her and her brother. Some signs on the envelope told her all she
wanted to know, but the letter contained no writing. “We are both so
poor,” she added, “that we invented this mode of corresponding
without paying for the letters.” The traveler, continuing his road,
asked himself if a system giving rise to such frauds was not a vicious
one? Before sunset Rowland had planned to organize the postal
service upon a new basis—with what success is known to the world.
Wedding Anniversaries.
First Cotton.
Second Paper.
Third Leather.
Fifth Wooden.
Seventh Woollen.
Tenth Tin.
Twelfth Silk and fine linen.
Fifteenth Crystal.
Twentieth China.
Twenty-fifth Silver.
Thirtieth Pearl.
Fortieth Ruby.
Fiftieth Golden.
Seventy-fifth Diamond.
 How Man is Constructed.
The average weight of an adult man is 140 pounds 6 ounces.
The average weight of a skeleton is about fourteen pounds.
Number of bones, 240.
The skeleton measures one inch less than the living man.
The average weight of the brain of a man is three and a half pounds;
of a woman, two pounds eleven ounces.
The brain of man exceeds twice that of any other animal.
The average height of an Englishman is five feet nine inches; and of
a Belgian, five feet six and three-quarter inches.
The average weight of an Englishman is 150 pounds; of a
Frenchman, 136 pounds; a Belgian, 140 pounds.
The average number of teeth is thirty-two.
A man breathes about twenty times a minute, or 1,200 times an
hour.
A man breathes about eighteen pints of air in a minute, or upwards
of seven hogsheads in a day.
A man gives off 4.08 per cent carbonic gas of the air he respires;
respires 10,666 cubic feet of carbonic acid gas in twenty-four hours,
equal to 125 cubic inches common air.
A man annually contributes to vegetation 124 pounds of carbon.
The average of the pulse in infancy is 120 per minute; in manhood,
80; at 60 years, 60. The pulse of females is more frequent than that
of males.
 Height of Monuments, Towers and
Structures.
The height, in feet, of the most lofty monuments and other structures
in the world is given in the following table:
Feet.
Washington Monument, Washington, D. C. 555
Pyramid of Cheops, Egypt 543
Antwerp Cathedral, Belgium 476
Strasburg Cathedral, France 474
Tower of Utrecht, Holland 464
St. Stephen’s Steeple, Vienna 460
Pyramid of Cephenes, Egypt 456
St. Martin’s Church, Bavaria 456
St. Peter’s, Rome 448
Salisbury Spire, England 410
St. Paul’s, London, England 404
 Denominations and Sects.
English-speaking populations, according to creeds:
Episcopalians 21,100,000
Methodists of all descriptions 15,800,000
Roman Catholics 14,340,000
Presbyterians of all descriptions 10,500,000
Baptists of all descriptions 8,180,000
Congregationalists 6,000,000
Unitarians 1,000,000
Free Thought 1,100,000
Minor Religious Sects 2,000,000
Of no particular religion 9,000,000
English-speaking population 89,020,000
 Area of Oceans.
The area of the five oceans of the globe is as follows:
Pacific 71,000,000 square miles
Atlantic 30,000,000 “
Indian 28,000,000 “
Antarctic 8,500,000 “
Arctic 4,500,000 “
 Area and Depth of Inland Seas.
In the following table are given the area and depth of the principal
lakes and inland seas of the world:
Name. Size. Depth.
Caspian Sea 176,000 sq. miles 250 feet.
Sea of Aral 30,000 “ 100 “
Dead Sea 303 “ 200 “
Lake Baikal 12,000 “ 750 “
Lake Superior 32,000 “ 1,000 “
Lake Michigan 22,400 “ 1,000 “
Lake Huron 21,000 “ 1,000 “
Lake Erie 10,815 “ 204 “
Lake Ontario 6,300 “ 336 “
Lake Nicaragua 6,000 “ 300 “
Lake Titacana 3,012 “ 800 “
Salt Lake 1,875 “ 1,400 “
Lake Tchad 14,000 “ 350 “
Lake Ladoga 12,000 “ 1,200 “
 Population of the Earth.
Inhabitants.
Continental Area in Per Sq.
Divisions. Sq. Miles. No. Mile.
Africa 11,514,000 127,000,000 11.0
America, N. 6,446,000 89,250,000 13.8
America, S. 6,837,000 36,420,000 5.0
Asia 14,710,000 850,000,009 57.7
Australasia 3,288,000 4,730,000 1.4
Europe 3,555,000 380,200,000 106.9
Polar Regions 4,888,800 300,000 0.7
Total 51,238,800 1,487,900,000 29.0
States Admitted to the Union.
States. Admitted.
1 Vermont 1791, March 4.
2 Kentucky 1792, June 1.
3 Tennessee 1796, June 1.
4 Ohio 1802, November 29.
5 Louisiana 1812, April 30.
6 Indiana 1816, December 11.
7 Mississippi 1817, December 10.
8 Illinois 1818, December 3.
9 Alabama 1819, December 14.
10 Maine 1820, March 15.
11 Missouri 1821, August 10.
12 Arkansas 1836, June 15.
13 Michigan 1837, January 26.
14 Florida 1845, March 3.
15 Texas 1845, December 29.
16 Iowa 1846, December 28.
17 Wisconsin 1848, May 29.
18 California 1850, September 9.
19 Minnesota 1858, May 11.
20 Oregon 1859, February 14.
21 Kansas 1861, January 29.
22 West Virginia 1863, June 19.
23 Nevada 1864, October 31.
24 Nebraska 1867, March 1.
25 Colorado 1876, August 1.
26 North Dakota 1889, November 2.
27 South Dakota 1889, November 2.
28 Montana 1889, November 8.
29 Washington 1889, November 11.
30 Idaho 1890, July 3.
31 Wyoming 1890, July 11.
 Transcriber’s Notes:
Punctuation has been made consistent.
*** END OF THE PROJECT GUTENBERG EBOOK THE HANDY
MANUAL: A VERITABLE MINE OF USEFUL AND INTERESTING
STATISTICS, INFORMATION, ETC ***

Updated editions will replace the previous one—the old editions

will be renamed.

Creating the works from print editions not protected by U.S.

copyright law means that no one owns a United States copyright
in these works, so the Foundation (and you!) can copy and
distribute it in the United States without permission and without
paying copyright royalties. Special rules, set forth in the General
Terms of Use part of this license, apply to copying and
distributing Project Gutenberg™ electronic works to protect the
PROJECT GUTENBERG™ concept and trademark. Project
Gutenberg is a registered trademark, and may not be used if
you charge for an eBook, except by following the terms of the
trademark license, including paying royalties for use of the
Project Gutenberg trademark. If you do not charge anything for
copies of this eBook, complying with the trademark license is
very easy. You may use this eBook for nearly any purpose such
as creation of derivative works, reports, performances and
research. Project Gutenberg eBooks may be modified and
printed and given away—you may do practically ANYTHING in
the United States with eBooks not protected by U.S. copyright
law. Redistribution is subject to the trademark license, especially
commercial redistribution.

START: FULL LICENSE

THE FULL PROJECT GUTENBERG LICENSE
 PLEASE READ THIS BEFORE YOU DISTRIBUTE OR USE THIS WORK

To protect the Project Gutenberg™ mission of promoting the

free distribution of electronic works, by using or distributing this
work (or any other work associated in any way with the phrase
“Project Gutenberg”), you agree to comply with all the terms of
the Full Project Gutenberg™ License available with this file or
online at www.gutenberg.org/license.

Section 1. General Terms of Use and

Redistributing Project Gutenberg™
electronic works
1.A. By reading or using any part of this Project Gutenberg™
electronic work, you indicate that you have read, understand,
agree to and accept all the terms of this license and intellectual
property (trademark/copyright) agreement. If you do not agree to
abide by all the terms of this agreement, you must cease using
and return or destroy all copies of Project Gutenberg™
electronic works in your possession. If you paid a fee for
obtaining a copy of or access to a Project Gutenberg™
electronic work and you do not agree to be bound by the terms
of this agreement, you may obtain a refund from the person or
entity to whom you paid the fee as set forth in paragraph 1.E.8.

1.B. “Project Gutenberg” is a registered trademark. It may only

be used on or associated in any way with an electronic work by
people who agree to be bound by the terms of this agreement.
There are a few things that you can do with most Project
Gutenberg™ electronic works even without complying with the
full terms of this agreement. See paragraph 1.C below. There
are a lot of things you can do with Project Gutenberg™
electronic works if you follow the terms of this agreement and
help preserve free future access to Project Gutenberg™
electronic works. See paragraph 1.E below.
1.C. The Project Gutenberg Literary Archive Foundation (“the
Foundation” or PGLAF), owns a compilation copyright in the
collection of Project Gutenberg™ electronic works. Nearly all the
individual works in the collection are in the public domain in the
United States. If an individual work is unprotected by copyright
law in the United States and you are located in the United
States, we do not claim a right to prevent you from copying,
distributing, performing, displaying or creating derivative works
based on the work as long as all references to Project
Gutenberg are removed. Of course, we hope that you will
support the Project Gutenberg™ mission of promoting free
access to electronic works by freely sharing Project
Gutenberg™ works in compliance with the terms of this
agreement for keeping the Project Gutenberg™ name
associated with the work. You can easily comply with the terms
of this agreement by keeping this work in the same format with
its attached full Project Gutenberg™ License when you share it
without charge with others.

1.D. The copyright laws of the place where you are located also
govern what you can do with this work. Copyright laws in most
countries are in a constant state of change. If you are outside
the United States, check the laws of your country in addition to
the terms of this agreement before downloading, copying,
displaying, performing, distributing or creating derivative works
based on this work or any other Project Gutenberg™ work. The
Foundation makes no representations concerning the copyright
status of any work in any country other than the United States.

1.E. Unless you have removed all references to Project

Gutenberg:

1.E.1. The following sentence, with active links to, or other

immediate access to, the full Project Gutenberg™ License must
appear prominently whenever any copy of a Project
Gutenberg™ work (any work on which the phrase “Project
Gutenberg” appears, or with which the phrase “Project
Gutenberg” is associated) is accessed, displayed, performed,
viewed, copied or distributed:

This eBook is for the use of anyone anywhere in the United

States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it
away or re-use it under the terms of the Project Gutenberg
License included with this eBook or online at
www.gutenberg.org. If you are not located in the United
States, you will have to check the laws of the country where
you are located before using this eBook.

1.E.2. If an individual Project Gutenberg™ electronic work is

derived from texts not protected by U.S. copyright law (does not
contain a notice indicating that it is posted with permission of the
copyright holder), the work can be copied and distributed to
anyone in the United States without paying any fees or charges.
If you are redistributing or providing access to a work with the
phrase “Project Gutenberg” associated with or appearing on the
work, you must comply either with the requirements of
paragraphs 1.E.1 through 1.E.7 or obtain permission for the use
of the work and the Project Gutenberg™ trademark as set forth
in paragraphs 1.E.8 or 1.E.9.

1.E.3. If an individual Project Gutenberg™ electronic work is

posted with the permission of the copyright holder, your use and
distribution must comply with both paragraphs 1.E.1 through
1.E.7 and any additional terms imposed by the copyright holder.
Additional terms will be linked to the Project Gutenberg™
License for all works posted with the permission of the copyright
holder found at the beginning of this work.

1.E.4. Do not unlink or detach or remove the full Project

Gutenberg™ License terms from this work, or any files
containing a part of this work or any other work associated with
Project Gutenberg™.
 1.E.5. Do not copy, display, perform, distribute or redistribute
this electronic work, or any part of this electronic work, without
prominently displaying the sentence set forth in paragraph 1.E.1
with active links or immediate access to the full terms of the
Project Gutenberg™ License.

1.E.6. You may convert to and distribute this work in any binary,
compressed, marked up, nonproprietary or proprietary form,
including any word processing or hypertext form. However, if
you provide access to or distribute copies of a Project
Gutenberg™ work in a format other than “Plain Vanilla ASCII” or
other format used in the official version posted on the official
Project Gutenberg™ website (www.gutenberg.org), you must, at
no additional cost, fee or expense to the user, provide a copy, a
means of exporting a copy, or a means of obtaining a copy upon
request, of the work in its original “Plain Vanilla ASCII” or other
form. Any alternate format must include the full Project
Gutenberg™ License as specified in paragraph 1.E.1.

1.E.7. Do not charge a fee for access to, viewing, displaying,

performing, copying or distributing any Project Gutenberg™
works unless you comply with paragraph 1.E.8 or 1.E.9.

1.E.8. You may charge a reasonable fee for copies of or

providing access to or distributing Project Gutenberg™
electronic works provided that:

• You pay a royalty fee of 20% of the gross profits you derive from
the use of Project Gutenberg™ works calculated using the
method you already use to calculate your applicable taxes. The
fee is owed to the owner of the Project Gutenberg™ trademark,
but he has agreed to donate royalties under this paragraph to
the Project Gutenberg Literary Archive Foundation. Royalty
payments must be paid within 60 days following each date on
which you prepare (or are legally required to prepare) your
periodic tax returns. Royalty payments should be clearly marked
as such and sent to the Project Gutenberg Literary Archive
Foundation at the address specified in Section 4, “Information
 about donations to the Project Gutenberg Literary Archive
Foundation.”

• You provide a full refund of any money paid by a user who

notifies you in writing (or by e-mail) within 30 days of receipt that
s/he does not agree to the terms of the full Project Gutenberg™
License. You must require such a user to return or destroy all
copies of the works possessed in a physical medium and
discontinue all use of and all access to other copies of Project
Gutenberg™ works.

• You provide, in accordance with paragraph 1.F.3, a full refund of

any money paid for a work or a replacement copy, if a defect in
the electronic work is discovered and reported to you within 90
days of receipt of the work.

• You comply with all other terms of this agreement for free
distribution of Project Gutenberg™ works.

1.E.9. If you wish to charge a fee or distribute a Project

Gutenberg™ electronic work or group of works on different
terms than are set forth in this agreement, you must obtain
permission in writing from the Project Gutenberg Literary
Archive Foundation, the manager of the Project Gutenberg™
trademark. Contact the Foundation as set forth in Section 3
below.

1.F.

1.F.1. Project Gutenberg volunteers and employees expend

considerable effort to identify, do copyright research on,
transcribe and proofread works not protected by U.S. copyright
law in creating the Project Gutenberg™ collection. Despite
these efforts, Project Gutenberg™ electronic works, and the
medium on which they may be stored, may contain “Defects,”
such as, but not limited to, incomplete, inaccurate or corrupt
data, transcription errors, a copyright or other intellectual
property infringement, a defective or damaged disk or other