D3) Dallas Mfg produces combines at an inventory cost of $35,000 each that sell for$42,000 each. For credit-approved customers, Dallas leases the combines for$8,000 per year for five years. The combines are guaranteed to last four years andgenerally have a six-year life. Collection is predictable and reasonably assured.Additionally, the lessee is aware of all costs to be incurred under the lease that will|not be reimbursed by the lessor. Dallas Mfg treats a lathe lease as a(an)operating leaseordinary capital leasesales-type leasedirect-financing lease

A lease refers to the contract between two parties in which one party gives another the right to use…

Answered: direct-financing lease

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direct-financing lease

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

D3)

Dallas Mfg produces combines at an inventory cost of $35,000 each that sell for
$42,000 each. For credit-approved customers, Dallas leases the combines for
$8,000 per year for five years. The combines are guaranteed to last four years and
generally have a six-year life. Collection is predictable and reasonably assured.
Additionally, the lessee is aware of all costs to be incurred under the lease that will|
not be reimbursed by the lessor. Dallas Mfg treats a lathe lease as a(an)
operating lease
ordinary capital lease
sales-type lease
direct-financing lease

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