Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-Generally accepted accounting principles specify that a long-term noncancelable lease for a period equal to the life of the equipment is

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-Generally accepted accounting principles specify that a long-term noncancelable lease for a period equal to the life of the equipment is

Quizplus · Accepted Answer

A long-term noncancelable lease for a period equal to the life of the equipment is essentially equivalent to a purchase, as the lessee assumes most of the risks and rewards of ownership. Therefore, it should be recorded as a capital lease and recognized as an asset and liability in the balance sheet. The present value and future value tables can be used to calculate the present value of lease payments to determine whether the lease meets the criteria for a capital lease.

Use the Present Value and Future Value Tables Included in Appendix