Lessee Company leases equipment from Lessor Company for 8 years. The present value of the minimum lease payments is $210,000. The estimated life of the equipment is 9 years. This lease would be classified as an operating lease if (each of these is an independent assumption) The fair value of the equipment was $270,000. The equipment was made specially for Lessee. The estimated life of the equipment was increased to 10 years. There is a bargain purchase option at the end of the lease term.
Lessee Company leases equipment from Lessor Company for 8 years. The present value of the minimum lease payments is $210,000. The estimated life of the equipment is 9 years. This lease would be classified as an operating lease if (each of these is an independent assumption) The fair value of the equipment was $270,000. The equipment was made specially for Lessee. The estimated life of the equipment was increased to 10 years. There is a bargain purchase option at the end of the lease term.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Lessee Company leases equipment from Lessor Company for 8 years. The present value of the minimum lease payments is $210,000. The estimated life of the equipment is 9 years. This lease would be classified as an operating lease if (each of these is an independent assumption)
- The fair value of the equipment was $270,000.
- The equipment was made specially for Lessee.
- The estimated life of the equipment was increased to 10 years.
- There is a bargain purchase option at the end of the lease term.
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