Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Kindly help me with accounting questions

Part A Maharaj Garage & Car Supplies sells a variety of automobile cleaning gadgets including a variety of hand vacuums. The business began the first quarter (January to March) of 2024 with 20 (Mash up Dirt) deep clean, cordless vacuums at a total cost of $126,800. During the quarter, the business completed the following transactions relating to the "Mash up Dirt" brand. January 8 January 31 February 4 February 10 February 28 March 4 March 10 105 vacuums were purchased at a cost of $6,022 each. In addition, the business paid a freight charge of $518 cash on each vacuum to have the inventory shipped from the point of purchase to their warehouse. The sales for January were 85 vacuums which yielded total sales revenue of $768,400. (25 of these units were sold on account to Mandys Cleaning Supplies, a longstanding customer) A new batch of 65 vacuums was purchased at a total cost of $449,800 8 of the vacuums purchased on February 4 were returned to the supplier, as they were either not of…

Quick answer of this accounting questions

Answer 2

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Answer 8

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer 12

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Answer 13

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Answer 14

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Answer 15

Ch. 18 - Does the lessee become the owner of the equipment...Ch. 18 - Prob. 18.2Q Ch. 18 - Prob. 18.3Q Ch. 18 - Prob. 18.4Q Ch. 18 - Prob. 18.5Q Ch. 18 - Prob. 18.6Q Ch. 18 - Prob. 18.7Q Ch. 18 - Prob. 18.8Q Ch. 18 - Prob. 18.9Q Ch. 18 - Prob. 18.10Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Concept explainers

Videos

Answer to Problem 18.1Q

Explanation of Solution

Want to see more full solutions like this?

Chapter 18 Solutions

Additional Business Textbook Solutions