Case Study

Name of StudentName of ProfessorName of SubjectDateTO : The PartnerFROM : AccountantDATE : April 24 , 2008SUBJECT : Lease of overseer Scan Equipment of ` disablement out finished Inc and its ProperAccounting Treatment for In answer to the fatality to dismantle up a recommendation after an abstract and the require of Super Scan Equipment entered into ` try out Through Inc under a condition case contemplate , visualise this memo as dinner dress way of cedeing the results . found on my appreciation of the case study there is a need to submit the subscribe to of summation entered into on whether it is a direct financing , sales-type or run assume with the added requirements to intend the relevant advantages and disadvantages of each categorisation . In addition , a de marginination how to account for the consu lting services provided by the `See Through , Inc , the lessor in this case to the lessee will machinate segment of this memo . The colonisation of the issue will be based on what the present US generally veritable accounting principles (US GAAP ) or FASB Statement 13 offer on the matter The by-line thus atomic number 18 the workable options or classifications Option I - Treat as operational removeIn a contract of occupy , it is the lessee , who sites the tone on how to classify it origin rather than the lessor . His or her choice is between run wage and capital letter hold . For the lessee to say it is an in operation(p) lease , the same must have failed to classify it as a capital lease . Thus , the situation calls for answering the movement when will a lease be classified as capital lease ? Incidentally , FASB Statement No .

13 has provided each of the four specified criteria to be to have a capital lease and they are (1 ) The lease transfer self-possession of the lease as stria to the lessee at the end of the lease marge (2 ) The lessee has the slew purchase option (3 ) The lease term is for the major part of the economic life of the summation even if the title is not transferred or (4 . The present value of the minimum lease payments amounts to well all of the fair value of the rent asset at the inception of the lease . Using therefore the said set of criteria there seems to be no shadow that the lease was an direct lease since there is an indication that the lease of equipment by See Through to Super Scan is cover under the 3rd requirement . Since it is required that compliance with each of four is satisfactory to have a capital lease then operating lease is indeed not workable . To support its classification into a capital lease , twain the lease term and the expected life of the leased asset cover a period of 36 months , that is more than a year or long enough not to puzzle an operating lease . As the lease term and the asset life are the same , the requirement of the third particular in the set of criteria for the lease term...If you want to get a full essay, golf club it on our website: OrderCustomPaper.com

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