III. Question three (25 marks) A finance company has purchased an asset to lease out to...
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III. Question three (25 marks) A finance company has purchased an asset to lease out to a manufacturing company. The asset cost $500,000 and has an economic life of 10 years. The lease is for 9 years at an annual rental (in arrears) of $87,000 per annum. The interest rate implicit in the lease is 10%. (P/A, 10%,9)=5.759. Required On Lessor's view, is this lease a finance lease or an operating lease? Give the reasons. III. Question three (25 marks) A finance company has purchased an asset to lease out to a manufacturing company. The asset cost $500,000 and has an economic life of 10 years. The lease is for 9 years at an annual rental (in arrears) of $87,000 per annum. The interest rate implicit in the lease is 10%. (P/A, 10%,9)=5.759. Required On Lessor's view, is this lease a finance lease or an operating lease? Give the reasons.
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Step 12 A lease arrangement qualifies as operating lease if it satisfies all of the following the le... View the full answer
Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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