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Chapter 15 Exercise C Each of the four independent situations below describes a lease requiring annual lease pay of $30,000 ments Situation 2 Lease term
Chapter 15 Exercise C Each of the four independent situations below describes a lease requiring annual lease pay of $30,000 ments Situation 2 Lease term (years) 4 4 6 Asset's useful life (years) 6 6 Asset's fair value $132,000! $123,000| $129,000| $117,000 No Yes No No Bargain purchase option? Annual lease payments Lessors implicit rate (known by lessee) Beg. of yr. Beg. of yr End of yr. End of yr 5% 7% 8% 5% 5% 5% 5% 5% Lessee's incremental borrowing rate PV if Minimum Lease Payments $111,698 $111,698 $106,379 $106,379 Required: For each situation, determine the appropriate lease classification by the lessee and indicate why
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