Lisa's Riding Equipment Company has entered into two lease arrangements. One lease is an operating lease on an office copier requiring annual lease payments of $2,000 for the next three years. The other lease is a 15-year financial lease on a building requiring annual lease payments of $150,000. If the firm's discount rate is 10 percent, how should each lease be presented on the firm's balance sheet?
What will be an ideal response?
Operating lease: The basic features such as the annual lease payment and the term of the lease should be disclosed in a footnote.
Operating lease: The basic features such as the annual lease payment and the term of the lease should be disclosed in a footnote.
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