- This topic has 1 reply, 2 voices, and was last updated 7 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
what is the meaning of the shorter of the useful life and the lease term means ?
Say an asset with estimated useful life of 6yrs for an initial period of 5 years was leased and optional secondary period of 2 years during which a nominal rental will be payable. The present value of the initial period lease payment is $87,000.
If we are to calculate the CA of the asset in the SOPF at the end of the second year of the lease ?
If we use 6yrs as the useful life of the asset to depreciate for the first yr that will be 87,000/6 = 14,500.
Second yr will be $29,000 then CA is $58,000
But if you like the option of two yrs and the lease term of 5yrs why are we using using 6yrs?
Viewing 2 posts - 1 through 2 (of 2 total)
- The topic ‘Lease’ is closed to new replies.