The Kimberly Equipment Company has had a flat pattern of sales revenue for the past five years. A consultant for the company has stated that the company could experience an estimated 25% sales revenue growth if it permitted customers to lease equipment in addition to its normal sales procedures.
Required:
a.Describe the accounting procedures that should be used by the Kimberly Equipment Company if the lease agreements were classified as "sales-type" leases.
b.List two reasons why sales might increase if customers are permitted to lease the equipment.

Question

The Kimberly Equipment Company has had a flat pattern of sales revenue for the past five years. A consultant for the company has stated that the company could experience an estimated 25% sales revenue growth if it permitted customers to lease equipment in addition to its normal sales procedures.
Required: 
a.Describe the accounting procedures that should be used by the Kimberly Equipment Company if the lease agreements were classified as "sales-type" leases.
b.List two reasons why sales might increase if customers are permitted to lease the equipment.

Quizplus · Accepted Answer

The Answer of The Kimberly Equipment Company has had a flat pattern of sales revenue for the past five years. A consultant for the company has stated that the company could experience an estimated 25% sales revenue growth if it permitted customers to lease equipment in addition to its normal sales procedures.
Required: 
a.Describe the accounting procedures that should be used by the Kimberly Equipment Company if the lease agreements were classified as "sales-type" leases.
b.List two reasons why sales might increase if customers are permitted to lease the equipment.

The Kimberly Equipment Company Has Had a Flat Pattern of Sales