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Owl Co Leases an asset under a finance lease. The lease has primary period of 5 yrs and a secondary period of 2 yrs during which a nominal rental will be payable. The asset has an estimated useful life of 6 yrs and a currrent cash value of $89k. The PV of the minimum lease payment is $87k.
What is the CV of the asset at the end of the second yr of the lease?
Based on the steps pf my lecturer
1) FV-89000
2) MLPayment-87k
3) interest in supense- 87k-89k cant be nah?********* First doubt over here.
Secondly lease asset must be depreciated over lease period ryt, kaplan answer is wrong I think???Heaven knows what “Interest in suspense” is!
I would depreciate over shorter of lease term and useful life – I would depreciate over 5 years
okay u are with the kaplan kit,
these are the steps taught to me by my lecturer
seems okay with that
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