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?
Get 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 there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Which one of the following is a way to improve the S/Q rating of branded pairs produced at a particular production facility?
Answers (1)
The first three steps to allocating manufacturing overhead are taken before the year begins and include all of the following except A. estimating total manufacturing overhead costs for the coming year. B.
Answers (1)
Haley, a single taxpayer, owns and operates a Cafe (as a sole proprietorship). The business is not a specified services business.
Answers (1)
Which of the following is not a required Financial Statement under GAAP: a. Balance Sheet b. Income Statement c. Statement of Cash Flows d. Auditor's Report
Answers (1)
How much liability coverage does the average small business need
Answers (2)
New Questions in Business
Why do companies using a horizontal structure have cultures that emphasize openness, employee empowerment, and responsibility? What do you think a manager's job would be like in a horizontally organized company?
Answers (1)
One year a country has positive net exports. the next year it still has positive but larger net exports a. its trade surplus fell. b. its trade surplus rose. c. its trade deficit fell. d. its trade deficit rose.
Answers (1)
You are the production manager for the toy manufacturing process at the abc company. lumber company right arrow→ abc toy manufacturing company right arrow→ toy store at the mall an example of an internal supplier is a. the toy store at the mall. b.
Answers (1)
g Suppose you have a possible investment that costs $100 today but, starting one year from now, pays $5 in some years with probability 1/3, and in other years pays $10 with probability 1/3, and in other years pays 8$ with probability 1/3.
Answers (1)
On December 31, 2019, Hamilton Inc. sold a used industrial crane for $1,120,000 cash. The original cost of the crane was $5.38 million and its accumulated depreciation equaled $4.39 million on December 31, 2019.
Answers (1)