Alto Leases a car on 1st Jan 2020 for 2 years Option to extend 1 more year (reasonably certain to exercise) Useful life 10 years Lease payments $10,000/ year for 2 years Lease payment $15,000 for extension (1 year) Direct costs of $3,000 Interest rate is 5% All payments are due at the end of the year Determine initial carrying amount asset and liability
Alto Leases a car on 1st Jan 2020 for 2 years Option to extend 1 more year (reasonably certain to exercise) Useful life 10 years Lease payments $10,000/ year for 2 years Lease payment $15,000 for extension (1 year) Direct costs of $3,000 Interest rate is 5% All payments are due at the end of the year Determine initial carrying amount asset and liability
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Alto Leases a car on 1st Jan 2020 for 2 years Option to extend 1 more year (reasonably certain to exercise) Useful life 10 years Lease payments $10,000/ year for 2 years Lease payment $15,000 for extension (1 year) Direct costs of $3,000 Interest rate is 5% All payments are due at the end of the year Determine initial carrying amount asset and liability
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