Zzz c signed a lease agreement to use an equipment for 5, Ask an Expert

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ZZZ C. signed a lease agreement to use an equipment for 5 years with the payment of $10,000 (present value $43,295). The current market rate is 5% and the market value of the equipment is $45,000 with the useful life of 10 years.

In the first year of the lease contract, ZZZ Co. recorded SGA $20,000, no interest expense and Net Income $30,000 and tax rate was 40% using the Operating lease method.However, the CPA firm reported that ZZZ should have used the capital lease method. What would be the correct Net Income using the capital lease method?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9968472

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