Question: Adams Storage and Appraisal leased equipment to OAC Corporation
Adams Storage and Appraisal leased equipment to OAC Corporation for an eight-year period, at which time possession of the leased asset will revert back to Adams. The equipment cost Adams $32 million and has an expected useful life of 11 years. Its normal sales price is $45 million. The present value of the minimum lease payments for both the lessor and lessee is $40 million. The first payment was made at the inception of the lease. How would OAC classify this lease if it prepares its financial statements using IFRS? Why?
Relevant QuestionsOn January 1, 2011, Nath-Langstrom Services, Inc., a computer software training firm, leased several computers from Computer World Corporation under a two-year operating lease agreement. The contract calls for four rent ...Each of the four independent situations below describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee and indicate why.Each of the three independent situations below describes a capital lease in which annual lease payments are payable at the end of each year. The lessee is aware of the lessor's implicit rate of return.Required:For each ...Terms of a lease agreement and related facts were:a. Leased asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation).b. Annual lease payments at the ...In a sale-leaseback transaction, the owner of an asset sells it and immediately leases it back from the new owner. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally ...
Post your question