Case Study

Lessee and Lessor Accounting for Leases

Requirement a:

For Pippin the type of lease would be capital lease. The reason for this lease is due to the requirement that has been met. Capital lease refers to lease in which lessor only concern with financing the lease while all right are transfers to lessee. The requirements for this are transfer of ownership to lessee at end of lease term, must contain bargain options, 75% should be non-cancelable lease and lastly minimum present value should be greater than 90% or more than fair value of the leased asset. Meeting or falling any one ...