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Each of the four independent situations below describes a lease requiring annual lease payments of $10,000. For determine the appopriate lease clasificationbhe and indicate wihy.
Each of the four independent situations below describes a lease requiring annual lease payments of $10,000. For determine the appopriate lease clasificationbhe and indicate wihy. Situation 2 4 5 3 4 6 Lease term (years) Asset's useful life (years) Asset's fair value Purchase option that is reasonably certain to be exercised? Annual lease payments Lessor's implicit rate (known by lessee Lessee's incremental borrowing rate 4 4 6 44,000 $43,000 $41,000 $39,000 No Beg. of yr. 5% 5% Yes End of yr. 6% 5% No Beg. of yr. 5% 5% No End of yr. 6% 5%
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