Costco leased equipment from Cat Company under a four-year lease requiring equal annual payments of $170,000,...

Costco leased equipment from Cat Company under a four-year lease requiring equal annual payments of $170,000, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and a $1,000 guaranteed residual value. If Costco, incremental borrowing rate is 8%, what is the amount recorded for the asset at the lease inception?

$615,533

$592,765

$608,842

$569,937

Which of the following would be considered a capital lease? Assume all leases are noncancelable.

Lessee rents equipment for 5 years. The equipment has a useful life of 8 years.

Lessee rents equipment no bargain purchase option.

Lessee rents equipment, but the ownership does not transfer over.

Lessee rents equipment in which the present value of the minimum lease payments are $40,000 and the fair value of the equipment is $42,000

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ekkarill92 answered 1 year ago

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