Business, 10.03.2020 19:01 asia4772

Wildhorse Co. processes jam and sells it to the public. Wildhorse leases equipment used in its production processes from Windsor, Inc. This year, Wildhorse leases a new piece of equipment from Windsor. The lease term is 5 years and requires equal rental payments of $14,000 at the beginning of each year. In addition, there is a renewal option to allow Wildhorse to keep the equipment one extra year for a payment at the end of the fifth year of $13,000 (which Wildhorse is reasonably certain it will exercise). The equipment has a fair value at the commencement of the lease of $73,829 and an estimated useful life of 7 years. Windsor set the annual rental to earn a rate of return of 5%, and this fact is known to Wildhorse. The lease does not transfer title, does not contain a bargain purchase option, and the equipment is not of a specialized nature. How should Crane classify this lease?

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Wildhorse Co. processes jam and sells it to the public. Wildhorse leases equipment used in its produ...

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