Loans



Loans: Accounting Analysis

a) Type of lease for Pippin and Why?

Considering the case of Pippin, the most suitable lease for Pippin are either capital lease or finance lease as it is meeting condition of the present value of the minimum lease payment. This minimum payment should exceed 90% of the fair value of the leased assets. According to lease theories in order to be a capital lease, assets agreement must meet any of the stated requirements i.e. four conditions to be a capital lease (Jennings, 2012). The following calculation will show that Pippin fair value of the leased assets is more ...