Which of the following statements about purchase option is correct? The lessee includes its present value on the computation of lease liability only if it is guaranteed. None of the other choices is correct. It is ignored if the leased asset reverts back to the lessor at the end of the useful life. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised.
Which of the following statements about purchase option is correct? The lessee includes its present value on the computation of lease liability only if it is guaranteed. None of the other choices is correct. It is ignored if the leased asset reverts back to the lessor at the end of the useful life. Its present value is added to get the lease liability if it is reasonably certain that it will be exercised.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter19: Lease Financing
Section: Chapter Questions
Problem 6MC: The lessee compares the present value of owning the equipment with the present value of leasing it....
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Which of the following statements about purchase option is correct?
- The lessee includes its present value on the computation of lease liability only if it is guaranteed.
- None of the other choices is correct.
- It is ignored if the leased asset reverts back to the lessor at the end of the useful life.
- Its present value is added to get the lease liability if it is reasonably certain that it will be exercised.
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