Noel Company leases 25 cell phones for three years. The rent for the phones is $1,700 a month for 36 months ($61,200 in total). The fair value of the leased phones is $65,000. Noel has a 5.5% incremental borrowing rate and the PV of the lease payments is $56,557. Required: a. How would Noel have recorded this transaction under SFAS No. 13? b. How should Noel record this transaction under FASB ASC 842?
Noel Company leases 25 cell phones for three years. The rent for the phones is $1,700 a month for 36 months ($61,200 in total). The fair value of the leased phones is $65,000. Noel has a 5.5% incremental borrowing rate and the PV of the lease payments is $56,557. Required: a. How would Noel have recorded this transaction under SFAS No. 13? b. How should Noel record this transaction under FASB ASC 842?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Noel Company leases 25 cell phones for three years. The rent for the phones is $1,700 a
month for 36 months ($61,200 in total). The fair value of the leased phones is $65,000.
Noel has a 5.5% incremental borrowing rate and the PV of the lease payments is $56,557.
Required:
a. How would Noel have recorded this transaction under SFAS No. 13?
b. How should Noel record this transaction under FASB ASC 842?
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