The Deluxe Corporation has just signed a 168-month lease on an asset with a 19-year life. The minimum lease payments are $1,300 per month ($15,600 per year) and are to be discounted back to the present at a 9 percent annual discount rate. The estimated fair value of the property is $165,000.
a. Calculate the lease period as a percentage to the estimated life of the leased property.
b. Calculate the present value of lease payments as a percentage to the fair value of the property.
c. Should the lease be recorded as a capital lease or an operating lease. (Use criteria 3 and 4 for a capital lease.)

  • CreatedOctober 14, 2014
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