(Answered) Question - when a lease involves land and building and the

Accounting

Question - When a lease involves LAND and building and the FMV of the land in less than 25% of the combined FMV of the land an building, Hod do you compute the 90% for the test.

Let's assume that the Value of the land is $8 Million and the value of the building is $85 million. The present value of the the lease payments is $75 Million.

How does the test is performed?

PV of the lease payments/(FM of the LAND + FMV of the building)

PV of the Lease Payments/(FMN of the building)

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