Deepak Enterprises (DE) acquired a machinery from Jagat Enterprises (JE) for a lease term of five years

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Deepak Enterprises (DE) acquired a machinery from Jagat Enterprises (JE) for a lease term of five years that covers almost complete economic life of the asset. The lease commences on April 1, 2009 and will expire on March 31, 2014. The fair value of the machine at the commencement of the lease term is  ₹4,98,660 and JAL is required to pay to JE an annual lease rent of  ₹1,60,000 per annum and government has assured to pay JE a guaranteed residual value of  ₹50,000 at the end of the lease term. Calculate implicit interest rate.

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Financial Accounting

ISBN: 9780071078023

1st Edition

Authors: Dhanesh K. Khatri

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