ACC 541 Week 3 DQ 2 / Assignmentcloud.com

Question 1

ACC 541 Week 3 DQ 2

http://www.assignmentcloud.com/ACC-541/ACC-541-Week-3-DQ-2

On January 1, 2006, Von Company entered into two noncancelable leases for new machines to be used in its manufacturing operations. The first lease does not contain a bargain purchase option; the lease term is equal to 80 percent of the estimated economic life of the machine. The second lease contains a bargain purchase option; the lease term is equal to 50 percent of the estimated economic life of the machine.

How should Von classify each of the two leases? Why?

Answer 1

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