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ABC Corporation enters into an agreement with XYZ Rentals Co. on January 1, 2017 the...

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Accounting

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ABC Corporation enters into an agreement with XYZ Rentals Co. on January 1, 2017 the purpose of machine to used in its manufacturing operations. The following data pertain to the agreement 1. The term of the non-cancetable lease is 3 years with no renewal option. Payments of 143,716 www on www each year 2. The fair value of the machine on January 1, 20x1, is $400,000. The machine has remaining come of your with no salvage value. The machine reverts to the lessor upon the termination of the lease 3. ABC depreciates all machinery it owns on a straight-line basis 4. ABC's incremental borrowing rate is 10% per year. ABC does not have knowledge of the imported by 2 5. Immediately after signing the agreement but before deciding the proper accounting treatment of the law.XN2 that ABC Corp, is the defendant in a suit which is sufficiently material to make collectability of future lease payments as than probable PV of Annuity Due 8% 10% 3n 2.78326 2.73554 10n 7.24689 6.75902 From the viewpoint of XYZ Rentals, what type of lease agreement exists? none of these Finance lease Operating lease Direct financing lease Sales type lease

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