The following are the characteristics of a lease: Required: Determine the present value of the lease payments
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The following are the characteristics of a lease:
Required:
Determine the present value of the lease payments and the appropriate classification of this lease for the lessor.
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Fair value of leased asset Lease payments Lease term Payment frequency Payment timing Guaranteed residual value Interest rate implicit in the lease $600,000 $80,000 5 years Annual End of year None 8%
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