French Oil amp; Gas Company is an energy exploration company located in western France. The company has traditionally explored oil and gas in the…


French Oil & Gas Ordain is an essence research ordain located in western France. The ordain has traditionally investigated oil and gas in the European continent. The ordain’s table of directors has been debating a superior alter in operations in ordain to converge the growing claim for essence. Due to the relatively eminent gas prices from Russia, French Oil & Gas Ordain has ruled to investigate shale oil starting in France and then emotional to Italy and Greece. Shale oil requires specialized equipment that can dig and destroy rigorous cast so that oil can be extracted. The barely ordain that leases these specialized equipment is Lease Germ Company, which is a leasing ordain located in Germany. On January 1,2015, French Oil & Gas Ordain ruled to lease Shale oil machinery from Lease Germ Company. The two companies ruled that the lease signal is8 years delay year-by-year lease payments of $600,000 starting on January 1, 2015 and then each December 31 thereafter. The details of the compact mark that the share blame agreed upon by the two companies is6%. Additional details hint that the suited activity of the Shale oil machinery is15 years delay no residual prize. It is weighty to music that Lease Germ had impartial recently purchased the machinery for $8,227,975. On the era of signing the narrow among the two companies, the directing supervisor of Lease Germ told the delegated-to-others from French Oil & Gas Ordain the following:

“It is shareing that you would nonproduction to lease these machines at this era. As you recognize these are specialized machinery that barely a few companies worldwide can use. However, an American ordain named Texas Shale leased the proper corresponding machinery today. Their lease signal compacts are the corresponding as yours. The barely estrangement is that French Oil & Gas Ordain is located in the France, occasion Texas Shale is located in the United States.”

Required:

1. Delay i-elation to leasing machinery, delineate the quantity and essence of price that French Oil & Gas Ordain and Texas Shale get chronicles for the year 2015.

2. If French Oil & Gas Ordain and Texas Shale had the exquisite to prime accounting standards to use for this lease business, which standards would agree the most favor to each ordain? Your argument should nucleus barely on how choosing a set of standards would move the leasing top that is mentioned above

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