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Finance lease or operating lease are the options for 1, 2, 3, 4 Each of the independent situations below describes a lease. Present value of
Finance lease or operating lease are the options for 1, 2, 3, 4
Each of the independent situations below describes a lease. Present value of lease payments Asset's fair value Lease term Asset's useful life Transfers ownership to lessee? Bargain purchase option? Specialized asset? 1 $107,313 $112,000 4 years 6 years No No No Situation 2 3 $129,364 $83, 498 $250,000 $250,000 5 years 3 years 9 years 5 years No NO No No No Yes $149, 781 $250,000 6 years 6 years No No No Required: For each situation, determine the appropriate lease classification by the lessee. (Note, the PV of lease payments has already been calculated above.) Situation 2 3 (Click to select) (Click to select) 4 (Click to select) Lease Classification: (Click to select) Finance lease Operating leaseStep by Step Solution
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