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Information has been gathered for three leases that will be accounted for through straight-line depreciation: Required: For purchase option included in lease contract and lease 2, exercise of option reasonably certain. For lease 3, exercise of option not reasonably certain. For each leased asset, choose a depreciation period.       Lease 1 Lease 2 Lease 3 Initial lease term 6 years 6 years 13 years Renewal option n/a   4 years 6 years Economic life of the leased asset 7 years 15 years 20 years Purchase option included in lease contract Yes   No   No   Depreciation term ? years ? years ? year

Information has been gathered for three leases that will be accounted for through straight-line depreciation: Required: For purchase option included in lease contract and lease 2, exercise of option reasonably certain. For lease 3, exercise of option not reasonably certain. For each leased asset, choose a depreciation period.       Lease 1 Lease 2 Lease 3 Initial lease term 6 years 6 years 13 years Renewal option n/a   4 years 6 years Economic life of the leased asset 7 years 15 years 20 years Purchase option included in lease contract Yes   No   No   Depreciation term ? years ? years ? year

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Information has been gathered for three leases that will be accounted for through straight-line depreciation:

Required:
For purchase option included in lease contract and lease 2, exercise of option reasonably certain. For lease 3, exercise of option not reasonably certain. For each leased asset, choose a depreciation period.

 
 
  Lease 1 Lease 2 Lease 3
Initial lease term 6 years 6 years 13 years
Renewal option n/a   4 years 6 years
Economic life of the leased asset 7 years 15 years 20 years
Purchase option included in lease contract Yes   No   No  
Depreciation term ? years ? years ? years
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