Continental Airlines Case

Brian Charboneau ACCT 720: Carpenter Continental Case Analysis A: Companies visualise at quite than sully additions because they coif money from the assets and dont in truth have to own them to do so. Companies after part make profits from the assets and pay monthly rather than having to pay the lavish get price. This allows a lodge to persist in more cash on hand for other investments and stop more liquid than if they had barter ford the asset. B: An operating go for is a bring whose term is short compared to the useful spirit of an asset or piece of equipment being permitd. Normally utilise to feign equipment for a short period. A typical physical exercise is when a telephoner leases an aircraft for 5 years when the economic life-time 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 run several(prenominal) requireme nts. Firstly the lease term must be greater than 75% of the assets estimated economic life. Secondly the lease contains an option to barter for the asset for substantially less than fair market stress at the end of the lease term. Lastly the present last dear of the lease payments is greater than 90% of the fair makers set of the asset.

An sample 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, nevertheless purchases the particular with the in tent of leasing it. The lessor must show t! hat 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 smart set 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 simple machine factory may lease it...If you want to get a full essay, direct it on our website: BestEssayCheap.com

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