In 2007, Ingram Textile Limited needed to acquire new, technologically improved production equipment. The equipment had a list price of $200,000, with a possible bargain price of $170,000. It should last for fifteen to twenty years with marginal efficiency latter in its life. The company has two options for acquiring the equipment. One option is to buy the equipment directly, financing 80% of the purchase price through a five-year loan with five equal annual principal payments at a 12% interest rate on the outstanding balance. The second option is to lease the equipment from Boston Lease Corp. The lease agreement would be for 10 years, with beginning-of-year lease payments of $24,000 per year. After expiration of the lease term, title to the equipment would remain with Boston. However, Boston agreed that they would leave the equipment with Ingram and eventual disposal would be up to Ingram. Issue The cash flow and financial reporting implications of acquiring the equipment through a loan, acquiring the equipment through a lease if it is treated as an operating lease, and acquiring ......

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