Star Company has entered into a 3-year lease agreement with Bell Corp. (lessor) for the use of 10 new commercial copy machines. The present value (PV) of the sum of the lease payments is $72,000. The total fair value of the machines on the lease commencement date is $120,000. An option to purchase the machines is not part of the lease agreement, and the copy machines will be returned to Bell at the end of the lease period. The machines are not specialized, and Bell will be able to lease or sell the leased machines after they are returned. The estimated useful life is 7 years. The residual value of $6,500 per machine is not guaranteed by Star or by a third party. It is probable that all lease payments will be collected. How should the lease be classified by the lessor?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Star Company has entered into a 3-year lease agreement with Bell Corp. (lessor) for the use of 10 new commercial copy machines. The present ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Last year Ann Arbor Corp had $195,000 of assets (which equals total invested capital), $305,000 of sales, $20,000 of net income, and a debt-to-total-capital ratio of 37.5%.
Answers (1)
What is the tax on money or property that one living person gives to another called
Answers (1)
There are four partners in the Dallas Pet Taxi company. One of the partners, Devin, decides to dismiss a particularly difficult client from using the company's services. He doesn't consult with the other three partners in order to take this action.
Answers (1)
Extra Co. uses the direct write-off method of accounting for uncollectible accounts receivable. The entry to write off an account that has been determined to be uncollectible would be to a.
Answers (1)
If a business closes its accounts only at year-end a. Monthly and quarterly financial statements cannot be prepared. b. Adjusting entries are made only at year-end. c. Financial statements are prepared only at year-end. d.
Answers (1)
New Questions in Business
Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand.
Answers (1)
McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid.
Answers (1)
Why might Business classification and behavior change?
Answers (1)
Which of the following statements is true of expatriate managers? a. They are managers who work abroad. b. They are managers who work in domestic firms. c. They are managers who work for the emerging economies they are a part of. d.
Answers (1)
An industry with oligopolistic competition faces falling profits and its sales growth is slow. Demand for individual brands has become quite elastic--as consumers see competing products as almost homogeneous. Several firms have dropped out.
Answers (1)