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Big Bear Case Summary

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Big Bear Case Summary
On December 15, 2010, Big Bear Power entered into a lease agreement with Goliath Co. for a combustion turbine. In order for Big Bear to properly account for the transaction, the terms and provisions of the lease agreement must be evaluated and important decisions must be made. My discussion to follow will be presented in three parts. Part one will present the evaluations that must be made by Big Bear in terms of accounting for the lease. Part two will present the lease details and provisions of the lease and the options Big Bear will have in accounting for them. Finally, part three will present my recommendation for how to account for the lease transaction.
Part One – Decisions
The initial evaluation Big Bear must make is in determining
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