For lease l borman does not record a liability at the

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Unformatted text preview: transfers substantially all of the benefits and risks inherent to the ownership of property by meeting any one of the four criteria for classifying a lease as a capital lease. Specifically: • Lease J should be classified as a capital lease because the lease term is equal to 80 percent of the estimated economic life of the equipment, which exceeds the 75 percent or more criterion. • • Lease K should be classified as a capital lease because the lease contains a bargain purchase option. Lease L should be classified as an operating lease because it does not meet any of the four criteria for classifying a lease as a capital lease. b. Borman records the following liability amounts at inception: • For Lease J, Borman records as a liability at the inception of the lease an amount equal...
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This document was uploaded on 02/27/2014 for the course FMIS 3644 at University of Minnesota Duluth.

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