The Sirap Co. leased equipment from the Xylo co. with a fair market value of $200,000. The lease contract has payments of $30,000 at the end of each year. The terms are 10 years at 10% interest rate. There is no bargain purchase agreement and the lessor will repossess the equipment. The equipment has a useful life of 15 years. Use the 5 criteria and determine if the lease qualifies as a financing lease.
The Sirap Co. leased equipment from the Xylo co. with a fair market value of $200,000. The lease contract has payments of $30,000 at the end of each year. The terms are 10 years at 10% interest rate. There is no bargain purchase agreement and the lessor will repossess the equipment. The equipment has a useful life of 15 years. Use the 5 criteria and determine if the lease qualifies as a financing lease.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter20: Accounting For Leases
Section: Chapter Questions
Problem 10GI: Owens Company leased equipment for 4 years at 50,000 a year with an option to renew the lease for 6...
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The Sirap Co. leased equipment from the Xylo co. with a fair market value of $200,000. The lease contract has payments of $30,000 at the end of each year. The terms are 10 years at 10% interest rate. There is no bargain purchase agreement and the lessor will repossess the equipment. The equipment has a useful life of 15 years. Use the 5 criteria and determine if the lease qualifies as a financing lease.
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