Direct financing and sales-type lease-lessee and lessor

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Reference no: EM131185187

Direct financing and sales-type lease; lessee and lessor [LO15-3, 15-5, 15-6] Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians' Leasing purchased a lithotripter from Rand for $2,040,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2016. Lease Description: Quarterly lease payments $ 133,126 —beginning of each period Lease term 5 years (20 quarters) No residual value; no BPO Economic life of lithotripter 5 years Implicit interest rate and lessee's incremental borrowing rate 12 % Fair value of asset $ 2,040,000 Collectibility of the lease payments is reasonably assured, and there are no lessor costs yet to be incurred. Required: 1. How should this lease be classified by Mid-South Urologists Group and by Physicians' Leasing?

Reference no: EM131185187

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Direct financing and sales-type lease-lessee and lessor : Direct financing and sales-type lease; lessee and lessor [LO15-3, 15-5, 15-6] Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. How should this lease be classified by Mid-South Urolog..

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