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Johntech Inc. leased a new machine having an expec...




Johntech Inc. leased a new machine having an expected useful life of 30 years from Carbide Co. Terms of the noncancelable 25-year lease were that Johntech would gain title to the property upon payment of a sum equal to the fair market value of the machine at the termination of the lease. Johntech accounted for the lease as a capital lease and recorded an asset and a liability in the financial records. The asset recorded under this lease should properly be amortized over a. 5 years (the period of actual ownership). b. 22.5 years (75 percent of the 30-year asset life). c. 25 years (the term of the lease). d. 30 years (the total asset life).


Paper#9523 | Written in 18-Jul-2015

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