Thornhill Equipment $($lessor$)$ leased a construction crane to Vanier Construction $($lessee$)$ on January $1,2023.$ The following information relates to the leased asset and the lease agreement.

$($Click the icon to view the data.$)$

Both companies use the straight$-$line depreciation method for cranes, and they both have December $31$ year$-$end dates.

Requirement a$.$ Evaluate how the lessor $($Thornhill Equipment$)$ should account for the lease transaction.

Start by determining the present value of the lease payments $($PVLP$).$ Then calculate the percentage of the PVLP compared to the fair value of the leased asset. $($Use a financial calculator for all

present value computations. Enter all currency values as positive amounts rounded to the nearest whole dollar. Round the percentage to the nearest whole percent.$)$

Leased asset and lease agreementQuestion content area top

Part $1$

Thornhill Equipment$($lessor$)$ leased a construction crane to Vanier Construction$($lessee$)$ on January$1,2023.$ The following information relates to the leased asset and the lease agreement.

LOADING...$($Click the icon to view the$$ data.$)$

Both companies use the$$ straight$-$line depreciation method for$$ cranes, and they both have December $31$ year$-$end dates.

RequiredLOADING...

Question content area bottom

Part $1$

Requirement a$.$ Evaluate how the lessor $($Thornhill $$Equipment$)$ should account for the lease transaction.

Start by determining the present value of the lease payments$($PVLP$).$ Then calculate the percentage of the PVLP compared to the fair value of the leased asset. $($Use a financial calculator for all present value computations. Enter all currency values as positive amounts rounded to the nearest whole dollar. Round the percentage to the nearest whole$$ percent.$)$

PVLP

Fair value of asset

PVLP as $\%$ of fair value