Macinski Leasing Company leases a new machine to SharrerCorporation. The machine has a cost...

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Macinski Leasing Company leases a new machine to SharrerCorporation. The machine has a cost of $70,000 and fair value of$95,000. Under the 3-year, non-cancelable contract, Sharrer willreceive title to the machine at the end of the lease. The machinehas a 3-year useful life and no residual value. The lease wassigned on January 1, 2020. Macinski expects to earn an 8% return onits investment, and this implicit rate is known by Sharrer. Theannual rentals are payable on each December 31, beginning December31, 2020.

(a)

Discuss the nature of the lease arrangement and the accountingmethod that each party to the lease should apply.

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Nature of Lease Agreement For Lessee The lease is a capital lease after considering the following things 1 The ownership is being transferred to the lessee after lease 2 The lease term is See Answer

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In: AccountingMacinski Leasing Company leases a new machine to SharrerCorporation. The machine has a cost of...Macinski Leasing Company leases a new machine to SharrerCorporation. The machine has a cost of $70,000 and fair value of$95,000. Under the 3-year, non-cancelable contract, Sharrer willreceive title to the machine at the end of the lease. The machinehas a 3-year useful life and no residual value. The lease wassigned on January 1, 2020. Macinski expects to earn an 8% return onits investment, and this implicit rate is known by Sharrer. Theannual rentals are payable on each December 31, beginning December31, 2020.(a)Discuss the nature of the lease arrangement and the accountingmethod that each party to the lease should apply.