Question
Suppose that a company (LESSE) wants to lease a car for marketing and advertising purposes. The company agrees with the lessor to pay equal amounts
Suppose that a company (LESSE) wants to lease a car for marketing and advertising purposes. The company agrees with the lessor to pay equal amounts of 110,000 TL at the end of each year The lease agreement has a maturity of 4 years and has a borrowing cost of 4%. Also assume that the economic life of the car is 4 years and accelerated method of depreciation is applied.
Refer to the question above and suppose that this is an operating lease and straight line depreciation is applied. In that case what would be the net income change for the lessor in the third year of the agreement?
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