Contract A:
This contract is a lease.  CTC has an identified the asset in a specific location of the mall.  During the duration of the 2-year contract, CTC has a right to use the kiosk and sell products at its own discretion at a kiosk that is permanently affixed near the entrance.  As a result, CTC has the right to obtain substantially all the economic benefits derived from use of the asset throughout the lease term.  

Contract B:
The contract is still a lease.  CTC has the right to obtain substantially all the economic benefits derived from using the asset (100% of the economic benefit generated by the cell phone kiosk will go to CTC) throughout the lease term; however, a small portion of the cash flows generated (10%) from using 100% of that asset will be passed on to the lessor.  The cash flow requirement is irrelevant in determining whether or not the CTC contract is a lease.  

Contract C:
Given that the kiosk does not have a permanent location in the mall, there is no identified asset. Only the amount of space is specified in the contract but not an exact locatoin. Therefore, this is not a lease contract and is not accounted for as a lease.

On 1 March 20X4, Machine Manufacturing Co. leased a machine to Dry Goods through a threeyear lease. The annual lease payments of $18,110 start on 1 March 20X4, and continue for three years. The interest rate implicit in the lease is 8.5% and the machine will remain with the lessee at the end of the lease. Machines of this type are usually sold for $50,185 with a cost to Machine Manufacturing Co. of $40,000 to build.

Required:
1. Should this lease be accounted for as a financing-type lease or a manufacturer or dealer-type lease?
2. What journal entries should be recorded on March 1, 20X4?