Reference no: EM132612617

Logical Logistics Inc. (Logical Logistics or the "Company") provides transportation and logistics services to customers through a network of offices in North America, South America, and Asia. The Company contracts fleets of shipping vessels, trucks, and aircraft to provide regional, long-haul, and international shipments of customer goods. In addition, the Company contracts warehouse operators across North America for use of their facilities as distribution centers that temporarily store goods in transit. The Company has entered into the following contract with the vendor identified below.

Logical Logistics enters into a contract with See Boat Inc. (See Boat) to use its shipping vessels to transport customer goods from North America to Asia. See Boat has a fleet of 25 multi-use shipping vessels, each of which has the capacity to hold 1,000 shipping containers.

The terms of the contracts are as follows:

See Boat

• The contract term is for the duration of the voyage to transport Logical Logistics's cargo from Los Angeles to Shanghai. Logical Logistics does not have discretion to change the departure or arrival ports without a renegotiation of the contract fees.
• SB0829, a commercial shipping vessel in See Boat's fleet, is dedicated to delivering Logical Logistics's cargo for the term of the contract. See Boat cannot substitute SB0829 with another vessel in its fleet.
• The contract identifies the shipping containers and acceptable cargo (e.g., semiconductors) to be transported on the ship as well as the transportation route. Logical Logistics does not have discretion to change the identified cargo without renegotiating the contract fees.
• See Boat is responsible for the safe passage of the cargo, as well as operation and maintenance ofSB0829. The crew determines the ship's route, speeds, and date of departure from Los Angeles. In addition, Logical Logistics cannot, under any circumstances, replace See Boat's crew.

Required:

Analyze the information above, and address the impact (if any) of the leasing standards in ASC 842 on Logical Logistics's arrangements for the following considerations:

Question 1. Determine whether each of Logical Logistics's vendor contract contains an identified asset.

Question 2. Determine whether each contract conveys the right to control the use of the identified asset to Logical Logistics.