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Tarkan Inc. leases an asset with the following information: Fair value of the asset: $400,000. Useful life of the asset: 6 years with no economic
Tarkan Inc. leases an asset with the following information:
Fair value of the asset: $400,000.
Useful life of the asset: 6 years with no economic salvage value.
Lease term is 3 years.
Annual lease payments (starting from beginning of year) are $60,000.
Implicit interest rate: 6%.
Tarkan can purchase the asset at the end of the lease period for $100,000.
What type of lease is this?
a. | Operating | |
b. | Finance | |
c. | Short term | |
d. | Long term | |
e. | Sale-Leaseback |
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