Lease a Does Not Contain a Bargain Purchase Option, but the Lease

question 65

Short Answer

Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property.Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 85% of the estimated economic life of the leased property.Using ASPE criteria, how should the lessee classify these leases?

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Definitions:

Net Profit

The amount of money remaining after all operating expenses, interest, taxes, and dividends have been deducted from total revenue.

Zone Price

The price based on geographic location or zone of customers.

Shipping Point

A location from which goods are dispatched or shipped to the buyer, often used to determine shipping costs and responsibility for the goods during transit.

Customer's Location

The geographical position or address of a customer, which can be important in logistics, service provision, and marketing strategies.