Question

Doherty Company leased equipment from Lambert Company. The classification of the lease makes a difference in the amounts reflected on the balance sheet and income statement of both Doherty and Lambert.

Required:
a. What criteria must be met by the lease so that Doherty Company can classify it as a capital lease?
b. What criteria must be met by the lease so that Lambert Company can classify it as a sales- type or direct financing lease?
c. Contrast a sales- type lease with a direct financing lease.



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  • CreatedDecember 17, 2014
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