Kawartha Lakes Scenic Tours Inc. has 4 years left on their 20-year lease, at $10,667 per year, for one of their double-decker tour boats. It will return the boat to the leasing company. The fair value of the boat is $285,000 and expected useful life of the boat is 35 years. What is this is an example of?

Question

Quizplus · Accepted Answer

This is an example of an Operating Lease because Kawartha Lakes Scenic Tours Inc. does not assume the risks and rewards of ownership over the leased asset (the double-decker tour boat) and will return it at the end of the lease term.