Chapter 18, Problem 18.3MC

Insight Corporation leases equipment for 5 years with annual rentals of $2,000 per year. The agreement also requires that Insight purchase supplies such as oil, fasteners, and filters directly from the lessor and must spend a minimum of $350 per year over the lease term. The total lease payments used to classify the lease are:

1. a. $11,750
2. b. $10,350
3. c. $10,000
4. d. $1,750