I have the following lease 20 years, variable payments first year $5,644,000 it will increase every year at 2.50%, FMV at the beginning of the lease $91,061,451.
It is a capital lease. We will amortized at 6% and depreciate the NPV over 28 years the life of the asset. I hope you know the entries to record this lease
At the end of year 14 The Unamortized balance is $41,574,331 and the Net Book Value is $39,433,148.
We decide to purchase the building at the Beginning of year 15 at FMV for $97,300,000.
Questions
1) What happens with the Net book value of the lease?
2) What happens to the Un-amortized balance?
3) What life should we use to depreciate the purchased asset?
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Please read the question.
I all our answer refer to the FASB or ASU that you are basing your answer.
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DO NOT GIVE ME any lecture or notes on Capital leases I already know all the literature about it.
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I am only looking for answer to the problem.
Answers
Status NEW
Posted 20 Jun 2017 01:06 AM
My Price 6.00
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