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Lessee Company leases equipment from Lessor Company for 8 years. The present value of the minimum lease payments is $210,000. The estimated life of the
Lessee Company leases equipment from Lessor Company for 8 years. The present value of the minimum lease payments is $210,000. The estimated life of the equipment is 9 years. This lease would be classified as an operating lease if (each of these is an independent assumption)
a. The fair value of the equipment was $270,000.
b. The equipment was made specially for Lessee.
c. The estimated life of the equipment was increased to 10 years.
d. There is a bargain purchase option at the end of the lease term.
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