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Which kind of lease is this from marple perspective

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Reference no: EM133000106

Marple Corp. (the lessor) has already determined the contract meets the definition of a lease according to ASC 842.

  • The lease term is five (5) years (1/1/X1 - 1/1/X6).
  • The lease requires the lessee to make periodic rental payments of $35,000 on January 1 of each year for five years beginning on 1/1/X1.
  • The machine has a remaining economic life of six (6) years at the start of the lease.
  • The fair market value of the machine at the inception of the lease is $141,307. The cost of the machine to the lessor is $60,000.
  • There is no residual value or bargain purchase option. The machine is not specialized to just the lessee.
  • The lease has an implicit rate of 12%.

Problem 1: Which kind of lease is this from Marple's (the lessor) perspective?

Select one:

a. Direct-financing

b. Operating lease

c. Sales-type lease

Reference no: EM133000106

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