Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

What do you think is the main criteria for the recognition of right of use asset and a lease liability on the part of the lessee?

Explain the major merits or benefits that accrue to the lessee by acquiring a tangible asset under a leasing agreement

What situations cause us to remeasure a lease liability and right-of-use asset How is that accomplished?

Answer 2

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 18, Problem 18.1Q

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Answer 8

Expert Solution & Answer

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Whether the ownership of equipments shifts to the lessee in a lease.

Answer 12

Answer to Problem 18.1Q

The lease only implies the transfer in disposal of asset and not a shift in ownership.

Answer 13

Explanation of Solution

Lease:

A lease or a lease agreement is a binding contract between two parties that states renting of asset for use under specific conditions, terms and clauses, usually for a period of 12 months or more. The lease takes into consideration the profiles of both parties and mentions any tools or terms for protection of the parties. The entity that gives out the asset on rent is the lessor and the entity that borrows the asset in exchange for payment of money is the lessee.

When a lease is drawn out, the agreement states the lessee obtains the right to use an asset; this right is given the lessee by the lessor in exchange for rental payments. Thus, the lessor is obligated to transfer productivity of assets as mentioned in the agreement but still remains the owner of the asset while the lessee has the right to acquire the asset they have paid the rent for.

Answer 14

Conclusion

Thus, the ownership of equipment does not transfer to the lessee from the lessor.

Answer 15

Ch. 18 - Does the lessee become the owner of the equipment...Ch. 18 - Prob. 18.2Q Ch. 18 - Prob. 18.3Q Ch. 18 - What are typical terms and provisions in a lease...Ch. 18 - How does a lease offer business and financial...Ch. 18 - Prob. 18.6Q Ch. 18 - How is the right-of-use asset measured?Ch. 18 - What components are included in a lease contract?Ch. 18 - How does a lessee separate lease and nonlease...Ch. 18 - How does a lessor separate lease and nonlease...

Does the lessee become the owner of the equipment when entering into an agreement to lease a piece of equipment? Explain.

Concept explainers

Videos

Answer to Problem 18.1Q

Explanation of Solution

Want to see more full solutions like this?

Chapter 18 Solutions

Additional Business Textbook Solutions