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E20-1 Determining Type of Lease and Subsequent Accounting Instructions (at the option of either party) agreeme On January 1, 2016, Caswell Company signs a 10-year

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E20-1 Determining Type of Lease and Subsequent Accounting Instructions (at the option of either party) agreeme On January 1, 2016, Caswell Company signs a 10-year cancelable following information pertains to this lease agreement: 1. The agreement requires rental payments of $100,000 at the end of each year 2. The cost and fair value of the building on January 1, 2016, is $2 million. 3. The building has an estimated economic life of 50 years, with no residual value, Caswell depreciate according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building 5. Caswell's incremental borrowing rate is 14% per year. wake set the annual rental to ensure a 16% service value anticipated for the term of the lease). 6. Executory costs of $7,000 annually, related to taxes on the property, are paid by Wake. ype of Lease E20-1 Determining Type of Lease and Subsequent Accounting Instructions (at the option of either party) agreeme On January 1, 2016, Caswell Company signs a 10-year cancelable following information pertains to this lease agreement: 1. The agreement requires rental payments of $100,000 at the end of each year 2. The cost and fair value of the building on January 1, 2016, is $2 million. 3. The building has an estimated economic life of 50 years, with no residual value, Caswell depreciate according to the straight-line method. 4. The lease does not contain a renewable option clause. At the termination of the lease, the building 5. Caswell's incremental borrowing rate is 14% per year. wake set the annual rental to ensure a 16% service value anticipated for the term of the lease). 6. Executory costs of $7,000 annually, related to taxes on the property, are paid by Wake. ype of Lease

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