Doherty Company leased equipment from Lambert Company. The classification of the lease makes a… 1 answer below »

 
   

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Doherty Company leased equipment from
Lambert Company. The classification of
the lease makes a difference in the amounts reflected on the balance sheet and
income statement of both Doherty and Lambert.

A)
What criteria must be met by
the lease so that Doherty Company can classify it as a capital lease?

B)
What criteria must be met by
the lease so that Lambert Company can classify it as a sales-type or direct
financing lease?

C) Contrast a sales-type lease with a direct
financing lease.