Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Use the following to answer questions 10 through 13 : Montana Inc. sells computer systems . Montana leases computers to Utah Company on June 30
Use the following to answer questions 10 through 13 : Montana Inc. sells computer systems . Montana leases computers to Utah Company on June 30 2021, The computers cost Montana $12 million to manufacture. The lease is non-cancelable and has the following terms : Lease payments: 2,466,754 semiannually; first payment due June 30, 2021; remaining payments due December 31 and June 30 each year through December 31, 2025. Lease term: years 10 semi-annual payments ). No residual value; no bargain purchase option. Economic life of equipment : 5 years . Implicit interest rate and lessee's incremental borrowing rate: 10% per year. Fair value of the computers at June 30, 2021: $20 million Collectability of the rental payments is reasonably assured, and there are no lessor costs yet to be incurred. 10. Montana would account for this A) A finance lease . B)A sales type lease without selling profit c)A sales type lease with selling profit . D)An operating lease . 11.Utah Company would account for this lease as: A) A finance lease. B) A sales type lease without selling profit . C)A sales type lease with selling profit. D)An operating lease
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started