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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. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Determine the price at which the lessor is "selling" the asset (present value of the lease payments). What would be the amounts related to the lease that the lessor would report in its income statement for the year ended December 31 (ignore taxes)?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92740421

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