Lease

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March 21, 2018 at 7:32 pm #443310
crisdinayanyan
Member
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Hi Sir, may I ask a question about the lease term. If the lease term is 5 years for an asset and the useful use is 6 years. Shall we use 6 years for calculating the PV of lease liability because it forms a major part of the economic life of the asset? How to define the ‘ major”?
March 23, 2018 at 9:10 pm #443639
P2-D2
Keymaster
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Hi,

We are only using the asset for the lease term of 5 years and so will only be paying lease payments for 5 years. We will therefore only have 5 years worth of payments to discount to present value.

Thanks
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