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For example, lessee pays during 4 years $1000 per year, 5 % rate. Present value is PV(5%,4years,1000) = $3,546.
Let’s say net book value of the given machine was $2000 when transferring. Lessor recognizes receivable at
DR-Receivable – $3546
CR- Machine- $2000
CR- Income- (3546-2000) $1546Is it correct ?
Thank you
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