Elton Electronics Elton Electronics Leases Testing Equipment to Startup Corporation. the Equipment

Elton Electronics
Elton Electronics leases testing equipment to Startup Corporation. The equipment is not specialized and is delivered on January 1, 2019. The fair value of the equipment is $90,000. The cost of the equipment to Elton is $85,000 and the expected life of the testing equipment is 8 years. Elton incurs initial direct costs of $10,000, which they elect to expense. The lease term for the equipment is 8 years, with the first payment due upon delivery, and seven subsequent annual payments beginning on December 31, 2019 and ending on December 31, 2025. Elton's implicit rate is 8% and they expect that collection of the eight payments of $14,500 payments is probable.
-How will Elton Electronics classify this lease?

Correct Answer:

Verified

Elton will classify this as a sales type...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

View Full Answer For Free