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We have an problem dealing with an international lease. The lease is from the U.S. parent company, to a UK subsidiary.

The U.S. parent company organizes the lease as an operating lease; the UK Company doesn't know how to categorize the lease. The particulars (as the Brits would state), are as given:

Lease length 15 years.

Incremental borrowing rate=10%

Useful life 30 years.

Payment =$10000

Residual value $1000

No renewal of lease available.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M9155828

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