Leases Flashcards
1
Q
what is the equation for FV
A
Fair Value + IDC lessor = PV Min lease pmts (includes gar residual) + PV of ungarunteed residual
2
Q
how to decide the period of depreciation?
A
- if transferred at the end of agreement use useful life
- if not use lease term
3
Q
how does a garuntee affect the depriciation?
A
if residual is guaranteed:
Depreciate cost of asset overlease term to guaranteed residual
If residual is not guaranteed
Depreciate cost of lease asset over lease term to zero
