Blue Manufacturing produces lathes at an inventory cost of $25,000 each that sell for $32,000 each. For
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Blue Manufacturing produces lathes at an inventory cost of $25,000 each that sell for $32,000 each. For credit-approved customers, Blue leases the lathes for $8,500 per year for five years. The lathes are guaranteed to last four years and generally have a six-year life. Collection is predictable and reasonably assured. Additionally, the lessor is aware of all costs to be incurred under the lease that will not be reimbursed by the lessor.
Blue Manufacturing treats a lathe lease as a/an:
Multiple Choice
direct-financing lease.
operating lease.
ordinary capital lease.
sales-type lease.
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
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