Question: BE 1 8 - 2 . Classification as Finance or Operating Lease, Lessee. [ Learning Objective 3 ] Scott Manufacturing is considering a lease to

BE18-2. Classification as Finance or Operating Lease, Lessee. [Learning Objective 3]
Scott Manufacturing is considering a lease to acquire new equipment. The useful life of the
asset is 10 years. Scott can lease the equipment from New City Bank for $1,000 per year over
an 8-year period. The lease does not contain a purchase option. There is no transfer of
ownership clause in the contract. Should Scott account for this lease as an operating or a
finance lease?
BE18-2. Classification as Finance or Operating Lease, Lessee. [Learning Objective 3]

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