Under a sales-type lease without an operating profit, how is the lessor’s cost (i.e., the initial Lease Receivable account) computed:

When there is no bargain purchase option or residual value?

When there is a bargain purchase option?

When there is no bargain purchase option but there is a guaranteed residual value?

When there is no bargain purchase option but there is an unguaranteed residual value?

Which discount rate does the lessor use in computing the lessor’s cost (lease receivable)—the lessor’s implicit rate or the lessee’s incremental borrowing rate? Why? Any exceptions?

Answer rating: 100% (QA)

Finance lease It is a lease which transfers substantially all the risk and rewards incidental to own... View the full answer