How is interest determined in a capital lease transaction? How does the approach compare to other forms of debt (say bonds payable or notes payable)?
Answer to relevant QuestionsHow are leases and installment notes the same? How do they differ?Can the present value of minimum lease payments differ between the lessor and lessee? If so, how?What are the required lease disclosures for the lessor and lessee?In the situation described in BE 15-1, what will be the effect of the lease on Lakeside's earnings for the first year (ignore taxes)?Manning Imports is contemplating an agreement to lease equipment to a customer for five years. Manning normally sells the asset for a cash price of $100,000. Assuming that 8% is a reasonable rate of interest, what must be ...
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