Question
The following information pertains to a computer properly classified as a general capital asset that Pine Township leased from Karl Supply Co. on July 1:
The following information pertains to a computer properly classified as a general capital asset that Pine Township leased from Karl Supply Co. on July 1:
- Karl's cost $4,900
- Fair value at July 1 $5,100
- Estimated economic life 5 years
- Fixed noncancelable term 30 months
- Rental due at beginning of each month $135
- Guaranteed residual value $2,000
- Present value of lease payments at the beginning of the lease using:
- Pine's incremental borrowing rate (10.5%) $5,120
- Karl's implicit interest rate (12.04%) known to Pine $5,000
On July 1, at what amount should Pine recognize the leased computer if the transaction is reported as a financed purchase?
When a lease of a governmental unit represents the acquisition of a general capital asset, the acquisition should be reflected as
Group of answer choices
Both an expenditure and an other financing source.
An expenditure but not as an other financing source.
An other financing source but not as an expenditure.
Neither an expenditure nor an other financing source.
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