Bondo Manufacturing has just signed a lease agreement with MIPS Computers. Bondo agreed to pay $15,000 per month for 12 months. The purchase price of the equipment is $400,000. According to the lease agreement, MIPS will pay property taxes and insurance on the equipment. This lease is most likely a financial lease.

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Valerie Stilwell · Accepted Answer

Final Answer : False, Explanation :  This lease is more likely an operating lease because it does not transfer the risks and rewards of ownership from the lessor to the lessee, indicated by the short-term nature (12 months on a $400,000 piece of equipment) and the lessor (MIPS Computers) maintaining responsibility for property taxes and insurance.

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