On 1 April 20X7 Pigeon entered into a five-year lease agreement for a machine with an...

 

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On 1 April 20X7 Pigeon entered into a five-year lease agreement for a machine with an estimated life of 7 years. Which of the following conditions would require the machine to be depreciated over 7 years? A. Pigeon has the option to extend the lease for two years at a market-rate rental. B. Pigeon has the option to purchase the asset at market value at the end of the lease. C. Ownership of the asset passes to Pigeon at the end of the lease period. D. Pigeon's policy for purchased assets is to depreciate over 7 years. On 1 April 20X7 Pigeon entered into a five-year lease agreement for a machine with an estimated life of 7 years. Which of the following conditions would require the machine to be depreciated over 7 years? A. Pigeon has the option to extend the lease for two years at a market-rate rental. B. Pigeon has the option to purchase the asset at market value at the end of the lease. C. Ownership of the asset passes to Pigeon at the end of the lease period. D. Pigeon's policy for purchased assets is to depreciate over 7 years.

Answer rating: 100% (QA)

C Ownership of the asset passes to Pigeon at the end of the lease period Explanation The ... View the full answer