Accounting, Analysis, and Principles Salaur Company is evaluating a lease arrangement being offered by TSP Company for use of a computer system. The lease is non-cancelable, and in no case does Salaur receive title to the computers during or at the end of the lease term. The lease starts on January 1, 2015, with the first rental due at the beginning of the year. Additional information related to the lease is as follows.

Accounting Analyze the lease capitalization criteria for this lease for Salaur Company. Prepare the journal entry for Salaur on January 1, 2015.
Analysis Briefly discuss the impact of the accounting for this lease for two common ratios: return on assets and debt to assets.
Principles What fundamental quality of the conceptual framework is being addressed when a company like Salaur evaluates lease capitalization criteria?

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Yearly rental Lease term Estimated economic life Purchase option Renewal option Fair value at inception of lease Cost of asset to lessor Residual value $3,557.25 3 years 5 years $3,000 at end of 3 years, which approximates fair value 1 year at $1,500; no penalty for non-renewal; standard renewal clause $10,000 $10,000 Guaranteed -0- Unguaranteed Lessor's implicit rate (known by lessee) Executory costs paid by: Estimated fair value at end of lease $3,000 12% Lessee; estimated to be $500 per year, Included in payments $3,000