Transaction C Surgimed Ghana Ltd. sells the technology needed to perform highly complex operations. When a hospital purchases equipment from Surgimed Ghana Ltd., it provides a very specialized piece of instrumentation, which is an integral part of the surgical process, free of charge. The legal ownership of the instruments remains with Surgimed Ghana Ltd. The instruments are returned to Surgimed Ghana Ltd. if they become faulty or at the end of their useful life, which is normally 1·5 years. At this point, Surgimed Ghana Ltd. replaces them with new instruments but retains the right to be reimbursed if the instruments are not returned. The instruments are nearly always returned at the end of their useful life and disposed of as clinical waste.

Required
The directors of Surgimed Ghana Ltd. would like advice on the accounting treatment for the instruments sold to the hospitals.

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The given case is an example of the capital lease agreement An agreement ... View the full answer