Question
On January 1, Year 1, Lessee entered into a 4-year lease of equipment with a 6-year economic life. The lease does not transfer ownership at
On January 1, Year 1, Lessee entered into a 4-year lease of equipment with a 6-year economic life. The lease does not transfer ownership at the end of the lease term or contain a purchase option. Also, the present value of the lease payments is 92% of the fair value of the leased asset. If no residual value is guaranteed, and no initial direct costs are incurred, what is the appropriate subsequent according for, or presentation of, the right-of-use asset?
A) Amortization equals the single periodic lease expense minus interest on the lease liability.
B) In the balance sheet, finance lease and operating lease right-of-use assets are presented in the same line itme
C) the amortization period is 4 years
D) in the income statement, amortization of the right-of-use asset and interest on the lease liability are presented in the same line item
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started