Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term but gives the lessee option to purchase the leased asset at the end of the lease term. The option price approximates the fair value of the asset at the end of the lease term. The lease term is 5 years while the estimated useful life of the asset is 10 years. How should the lessor classify Lease A and Lease B, respectively? * Finance lease; Finance lease Finance lease; Operating lease Operating lease; Finance lease Operating lease; Operating lease

Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term but gives the lessee option to purchase the leased asset at the end of the lease term. The option price approximates the fair value of the asset at the end of the lease term. The lease term is 5 years while the estimated useful life of the asset is 10 years. How should the lessor classify Lease A and Lease B, respectively? * Finance lease; Finance lease Finance lease; Operating lease Operating lease; Finance lease Operating lease; Operating lease

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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