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Owl leases an asset with an estimated useful life of 6 years for an initial period of 5 years, and an optional secondary period of 2 years during which a nominal rental will be payable. The present value of the initial period lease payments is $87,000.
What will be the carrying amount of the right of use asset in Owl’s SOFP at the second year of the lease?
I calculated $52,500 taking 5 years as they say shorter of the two.
But in the Kaplan answer section they take 6 year period. And the answer is $58,000.
I couldn’t understand this part.
Could you help me please?
Thank you.
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