On February 1, 2013, Pearson Corporation became the lessee of equipment under a

Q: On February 1, 2013, Pearson Corporation became the lessee of equipment under a

Pearson must classify this as a capital lease if The present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the lease property. =90%*700000= 630,000 $630,000.

ID: 2505258 • Letter: O

Question

On February 1, 2013, Pearson Corporation became the lessee of equipment under a five-year, noncancelable lease. The estimated economic life of the equipment is eight years. The fair value of the equipment was $700,000. The lease does not meet the definition of a capital lease in terms of a bargain purchase option, transfer of title, or the lease term. However, Pearson must classify this as a capital lease if the present value of the minimum lease payments is at least
   $700,000.
   $630,000.
   $624,015.
   $560,000.

which is the answer?

Explanation / Answer

Pearson must classify this as a capital lease if The present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the lease property.

=90%*700000= 630,000

$630,000.

Navigate

On February 1, 2013, Pearson Corporation became the lessee of equipment under a

On February 1, 2013, one of the huge storage tanks of Viking Manufacturing Compa

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

On February 1, 2013, Pearson Corporation became the lessee of equipment under a

Question

Explanation / Answer

Related Questions

Navigate