Watermill Pools enters into a 5-year agreement to lease equipment from Southampton Pool Supply. The equipment has
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Question:
Watermill Pools enters into a 5-year agreement to lease equipment from Southampton Pool Supply. The equipment has a useful life of 6 years. Which of the following is true?
- The lease should be treated as an operating lease as the term of the lease is less than 100% of the economic life of the equipment.
- The lease should be treated as an operating lease as the term of the lease is greater than 75% of the economic life of the equipment.
- The lease should be treated as a capital lease as the term of the lease is less than 100% of the economic life of the equipment.
- The lease should be treated as a capital lease as the term of the lease is greater than 75% of the economic life of the equipment.
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
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