This is a two part question: 1. List the criteria used for determining if a lease agreement is accounted for as a capital lease. 2. Using the criteria, is the lease described below a capital or operating lease? On January 1, 2017, Burke Corporation signed a 5 year noncancelable lease for a machine
This is a two part question:
1. List the criteria used for determining if a lease agreement is accounted for as a capital lease.
2. Using the criteria, is the lease described below a capital or operating lease?
On January 1, 2017, Burke Corporation signed a 5 year noncancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting January 1, 2017. The machine has an estimated useful life of 6 years and a $5,000 unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Burke uses the straight-line method of
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