Problema lease agreement that qualifies as a capital lease, Ask an Expert

Accounting

Problem:

A lease agreement that qualifies as a capital lease calls for annual lease payments of $36,000 over a four-year lease term, with the first payment at January 1, the lease's inception. The interest rate is 5%. Assume the asset being leased cost the lessor $125,000 to produce. Use pvad $1

Required:

Question 1: Determine the price at which the lessor is "selling" the asset (present value of the lease payments

Question 2: What would be the pretax amounts related to the lease that the lessor would report in its income statement for the year ended December 31?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91171957

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