Is this a capital or an operating lease why assuming it is

Reference no: EM13482250

On Jan.1, 2009, L Company leases a computer. The lease contract calls for 2 lease payments: $1,000 on December 31, 2009 and $1,000 on December 31, 2010. The title of the computer willre main with the lessor. There is no purchase option at the end of the lease. The estimated life of the computer is 3 years. The fair market value of the computer is $2,000. The appropriate discountrate is 10%.

a. Is this a capital or an operating lease? Why?

b. Assuming it is an operating lease, provide all journal entries related to the lease for the lessee, indicating the date of the journal entry.

c. Assuming it is a capital lease, provide all journal entries related to the lease for the lessee, indicating the date of the journal entry.

d. Why might the lessee prefer that the lease be an operating lease?

Reference no: EM13482250

Questions Cloud

What is the companys prior service cost at the beginning of : sachs brands defined benefit pension plan specifies annual retirement benefits equal to 1.5 times service years times

Write the journal entry to load furnish rawmaterials to job : on november 14th the milling department hasaccepted job 111407a for 1000 pounds of cereal mix. the bill ofmaterials bom

Alex wants to calculate a new cost using appropriate cost : most of the companys sales are from has been a standard in the industry for several years the market for this product

What effect will a two-for-one stock split have on the : what effect will a two-for-one stock split have on the following items found on a firms financial statements?1.

Is this a capital or an operating lease why assuming it is : on jan.1 2009 l company leases a computer. the lease contract calls for 2 lease payments 1000 on december 31 2009 and

What were the actual hours worked during the month rounded : information on westcottcompanys direct labor costs for a recent month followsstandard direct labor

The company has only 2000 machine hours available each : manny company produces three products x y and z with the following characteristicsx y

What amount will electronic distribution report in its 2013 : electronic distribution has a defined benefit pension plan. characteristics of the plan during 2013 are as follows

During the month of august zannys water ski radio : zanny electronics companyuses a standard cost system to collect costs related to theproduction of its water ski radios.

User Account

All Pages