Question
A lease has a lease term equal to 50 percent of the estimated economic life of the leased asset and the present value of the
A lease has a lease term equal to 50 percent of the estimated economic life of the leased asset and the present value of the lease cash flows is equal to 75 percent of the asset's underlying fair value. The asset is not expected to transfer ownership to the lessee and it is not expected to have an alternative use to the lessor after the lease term. For this lease, the lessor should
-recognize interest revenue evenly over the lease term using the straight line method
-not recognize interest revenue because this is an operating lease
-recognize all of the expected interest revenue at the lease's inception
-recognize interest revenue over the lease term using the effective interest methd
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