On January 1, 2020 Company A leases a machine from B Corp through a contract that requires 5 payments of $10,000 every January 1, beginning on that day. The present value of the payments discounted at 10% is 42,000. The useful life of the asset is 10 years and the market value is $45,000. How should you classify the A Corp lease? A) Type of sale B) None of the above C) Operational D) Financial
On January 1, 2020 Company A leases a machine from B Corp through a contract that requires 5 payments of $10,000 every January 1, beginning on that day. The present value of the payments discounted at 10% is 42,000. The useful life of the asset is 10 years and the market value is $45,000. How should you classify the A Corp lease? A) Type of sale B) None of the above C) Operational D) Financial
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020 Company A leases a machine from B Corp through a contract that requires 5 payments of $10,000 every January 1, beginning on that day. The present value of the payments discounted at 10% is 42,000. The useful life of the asset is 10 years and the market value is $45,000. How should you classify the A Corp lease?
A) Type of sale
B) None of the above
C) Operational
D) Financial
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