Situation 1 2 3. 4 Lease term (years) Asset's useful life (years) Asset's fair value Purchase...
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Situation 1 2 3. 4 Lease term (years) Asset's useful life (years) Asset's fair value Purchase option that is reasonably 4 4 4 4 6. 6 $44,000 $43,000 $41,000 $39,000 certain to be exercised? No Yes No No Annual lease payments Beg. of yr. End of yr. Beg. of yr. End of yr. 6% Lessor's implicit rate (known by lessee) Lessee's incremental borrowing rate 5% 6% 5% 5% 5% 5% 5% Each of the four Independent situations above describes a lease requiring annual lease payments of $10,000. For each situatlon, determine the appropriate lease classification by the lessee. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Situation Lease Classification 1. 2. 3. 4. Situation 1 2 3. 4 Lease term (years) Asset's useful life (years) Asset's fair value Purchase option that is reasonably 4 4 4 4 6. 6 $44,000 $43,000 $41,000 $39,000 certain to be exercised? No Yes No No Annual lease payments Beg. of yr. End of yr. Beg. of yr. End of yr. 6% Lessor's implicit rate (known by lessee) Lessee's incremental borrowing rate 5% 6% 5% 5% 5% 5% 5% Each of the four Independent situations above describes a lease requiring annual lease payments of $10,000. For each situatlon, determine the appropriate lease classification by the lessee. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Situation Lease Classification 1. 2. 3. 4.
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Classification criteria 1 Does the agreement specify that ownership of the asset transfers to the le... View the full answer
Related Book For
College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen
Posted Date:
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