Differences between direct-financing and a sales-type lease

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Reference no: EM133497262

Case: A lessee should classify a lease transaction as a finance lease if it is noncancelable and one or more of the five classification criteria are met. Otherwise, it is an operating lease.

Question 1: What are the 5 classification criteria's? Provide a few examples why a company would choose to lease an asset versus purchasing?

Question 2: What are the differences between a direct-financing and a sales-type lease for a lessor? Why would a lessor provide direct-financing to a lessee? What types of organizations provide direct-financing leases?

Reference no: EM133497262

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