You Tell Me, Am I a Lease? Auto Inc. (Auto) is a company based in New York that manufactures automobiles and exports the

[answerhappygod]

You Tell Me, Am I a Lease?
Auto Inc. (Auto) is a company based in New York that
manufactures automobiles and exports the finished vehicles to
Europe. Auto manufactures two models; the most popular model is a
four-door sedan (Sedan), and the other is a less
common, highly customizable luxury sports car (Luxury Car). Auto
contracts Trans-Atlantic Inc. (Atlantic) to ship its
products to Europe. Atlantic has a fleet of 10 multi-use shipping
vessels, each with capacity for 2,000 vehicles.
The terms of the shipping contracts are as follows:
Sedan contract terms:
• The term is five years.
• MV Manhattan, a ship in Atlantic’s fleet, is dedicated to
shipping Auto’s Sedans for the term of the
contract.
• Auto determines (1) which European ports receive shipments and
(2) the order in which deliveries are made
to the ports, Auto instructs Atlantic accordingly.
• Auto has the option to send the ship below capacity. If the ship
is below capacity, Atlantic cannot use the
excess capacity to ship products of its other customers.
Luxury Car contract terms:
• The term is five years.
• Atlantic is required to deliver shipments of Luxury Cars within
five weeks of notification from Auto that an
order of Luxury Cars is ready for shipping.
• Auto may provide 250 to 2,000 Luxury Cars in a single request;
however, shipping requests of Luxury Car
generally do not exceed 500 vehicles in a single request because of
the lower production volume and longer
manufacturing time of Luxury Car.
• Atlantic has the option to use excess capacity to ship products
of its other customers.
• After notification from Auto that Luxury Cars are ready to ship,
Atlantic determines when within the five week
period to ship the cars, as well as the shipping route.
Auto’s CFO understands that the new leasing standard has certain
provisions that may affect how the company treats
contracts of this nature.
Required:
Analyze this information to determine how to account for each
contract in accordance with the new leasing standard.
Your documented research and notes (no limit on pages). This
portion of your submission should (a) demonstrate alternatives and
how you chose among them and (b) document authoritative literature
and other sources used to arrive at your conclusion.