Pen Brush Which of these contractual terms would lead a company to account for a lease contract under the capital lease method? (check all that apply) The lease runs for 5 years on a truck that is expected to have a 6 year life The present value of the lease payments is $91,000. The truck

Pen Brush Which of these contractual terms would lead a company to account for a lease contract under the capital lease method? (check all that apply) The lease runs for 5 years on a truck that is expected to have a 6 year life The present value of the lease payments is $91,000. The truck

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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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

Yo a all 51% 11:00
LTE
abc
SAVE
Тext
Pen
Brush
Which of these contractual terms would lead
a company to account for a lease contract
under the capital lease method? (check all
that apply)
The lease runs for 5 years on a
truck that is expected to have a 6
year life
The present value of the lease
payments is $91,000. The truck
could be bought today for $100,000
cash.
Ownership stays with the lessor at
the end of the lease
The lessee can buy the truck at its
current market value at the end of
the lease
The IRS requires a capital lease
method for tax purposes for this
contract
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