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?

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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