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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Why are compound interest concepts appropriate and applicable in accounting for a sales-type lease?

To determine

Explain that the compounding interest concepts appropriate and applicable in accounting for a sale type lease.

Explanation

Sales type lease: It is a kind of lease, in which the lessor transfers the control of the leased asset to the lessee. Therefore, lesser effectively sells the asset to lessee and records its net investment in the lease.

As per the FASB, the interest income should be recognized which yields a constant return on net investment...

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