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Please do the question as detailed as possible. THanks! Like most companies in the medical equipment industry, Ultrasonic Corporation leases its medical equipment's to some
Please do the question as detailed as possible. THanks!
Like most companies in the medical equipment industry, Ultrasonic Corporation leases its medical equipment's to some customers and sell them to others. Recently, Ultrasonic has introduced a new line of equipment that may revolutionize the medical profession. Because of the new technology involved, potential users of the equipment are reluctant to purchase the equipment, but they are willing to enter into a lease arrangement as long as they can classify the lease as an operating lease. the new equipment will replace equipment that Ultrasonic Corporation has been selling in the past. It is estimated that a 25% loss of actual equipment sales will occur and thus Ultra Sonic's revenues will take a hit over the next couple of years as a result of the leasing policy for the new equipment. Some members of management want to structure the leases so that Ultrasonic Corporation, as a lessor, can classify the lease as a sales-type lease and thus avoid a further reduction of income. They are uncertain, however, as to how leases could be structured to permit the lessee to treat the lease as an operating lease and the lessor to treat it as a sales-type lease. How would Ultra Sonic's revenues "take a hit" as a result of more customers leasing rather than buying the medical equipment's
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