Continental Airlines Case

Brian Charboneau ACCT 720: Carpenter Continental Case Analysis A: Companies assist at quite than sully additions because they build up money from the assets and dont actually have to own them to do so. Companies after part make profits from the assets and pay monthly rather than having to pay the full-of-the-moon get price. This allows a lodge to persist in more(prenominal) than cash on hand for other investments and stop more liquid than if they had barter ford the asset. B: An operating secondment is a postulate whose term is short compared to the useful carriage of an asset or piece of equipment being lettingd. Normally utilize to feign equipment for a short period. A typical recitation is when a go with leases an aircraft for 5 years when the economic keep is 25 years plus. A capital lease is a lease of business equipment that represents ownership of the asset leased and is reflected on the proportion sheet. A capital lease must wreak sev eral(prenominal) requirements. Firstly the lease term must be greater than 75% of the assets estimated economic life. Secondly the lease contains an option to bribe the asset for substantially less than fair market suppose at the end of the lease term. Lastly the present take to dear of the lease payments is greater than 90% of the fair makers rate of the asset.

An manikin of a capital lease is a company buy a piece of heavy equipment that they pay in installments and purchase at the end of the lease. A direct pay lease occurs when the lessor of an asset is not the maker or dealer, yet purchases the part icular with the intent of leasing it. The ! lessor must show that the minimum lease payments can be collected and there are no uncertainties almost the amount of reimbursable costs that will be incurred. An example of a direct finance lease is if a go with A leased computers from Company B that had the computers with the purpose of leasing them. A gross sales type lease is a lease where a company rents its own assets that it needs to run its business. For example, an motorcar factory may lease it...If you want to get a full essay, direct it on our website: BestEssayCheap.com

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