Business, 23.05.2020 18:57 econsta3

Callaway Golf Co. leases telecommunication equipment from Photon Company. Assume the following data for equipment lease form Photon Company. The lease term is 5 years and requires equal rental payments of $31,000 at the beginning of each year. The equipment has a fair value at the commencement of the lease of $150,000, an estimated useful life of 8 years, and a guaranteed residual value at the end of the lease of $15,500. Photon set the annual rental to earn a rate of return of 6%, and this fact is known to Callaway. The lease does not transfer title or contain a bargain purchase option and is not a specialized asset. How should Callaway classify this lease?

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Callaway Golf Co. leases telecommunication equipment from Photon Company. Assume the following data...

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