On January 1, Year 1, Amira’s Stables Corp., which reports its financial results in accordance with ASPE, entered into a contract to lease a tractor, details of which follow: Lease term 2 years Economic life of equipment 5 years Lease payment $7,000 first due January 1, Year 1 FV of asset $15,000 Implicit rate in the lease (not known by lessee) 4% Incremental borrowing rate 6% Option to purchase No Guaranteed residual value No Amira uses the straight-line method of depreciation for its assets.

On January 1, Year 1, Amira’s Stables Corp., which reports its financial results in accordance with ASPE, entered into a contract to lease a tractor, details of which follow: Lease term 2 years Economic life of equipment 5 years Lease payment $7,000 first due January 1, Year 1 FV of asset $15,000 Implicit rate in the lease (not known by lessee) 4% Incremental borrowing rate 6% Option to purchase No Guaranteed residual value No Amira uses the straight-line method of depreciation for its assets.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 27E

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