Solution-What factors should crimson consider in supporting

What factors should crimson consider in supporting

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Question 1: Do you agree with Crimson's conclusion that the lease term for the cargo vessel is one year because the revenue contract is for one year?

Question 2: What factors should Crimson consider in supporting its conclusion related to the lease term?

Additional Facts On December 1, 2019, Crimson entered into a shipping contract with Redhawks Manufacturing Company ("Redhawks") to ship Redhawks' products between Shanghai and Los Angeles. The contract with Redhawks commences on January 1, 2020, and on the basis of Crimson's evaluation of its enforceable rights and obligations in the contract with Redhawks, Crimson concludes that term of the revenue contract with Redhawks is for a period of two years. Further, Crimson concludes that

(1) because of its contract with Matador and Redhawks, it would not be operationally feasible to deploy the leased cargo vessel on other routes;

(2) the cargo vessel will have suf?cient capacity to service both Matador and Redhawks; and

(3) the leased asset is needed for Crimson to perform under its revenue contract with Redhawks (because of economic reasons that would not allow Crimson to use another vessel).

Question 3: Should Crimson reassess the lease term of the cargo vessel? If so, why? Analyze

Reference no: EM132474211

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What factors should crimson consider in supporting

Reference no: EM132474211

Reference no: EM132474211

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