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Please use the information below to calculate the [1] 75% and 90% rule and [2] converting...

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Finance

Please use the information below to calculate the [1] 75% and90% rule and [2] converting operating lease to capital lease.Question 1 - AAA corporation leases an asset to BBB corporation for12 years beginning Jan 1, year 1 at annual rental of $7,000. Thefirst payment is due at the beginning of the first year. Theasset's economic life is 15 years and FMV of the asset at theinception of the lease $50,000. The lease require the BBB to pay$1,000 annual executory cost. The lease does not transfer ownershipnon contain a bargain purchase option. Interest 4%. Please use 75%and 90% to calculate qualification.

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As per the current GAAP rules a lease needs to be treated as a capital lease if any of the below given four criterions is met 1 Ownership of the leased asset transfers to the lessee upon completion of the lease 2 There is a bargain purchase option in the    See Answer
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Please use the information below to calculate the [1] 75% and90% rule and [2] converting operating lease to capital lease.Question 1 - AAA corporation leases an asset to BBB corporation for12 years beginning Jan 1, year 1 at annual rental of $7,000. Thefirst payment is due at the beginning of the first year. Theasset's economic life is 15 years and FMV of the asset at theinception of the lease $50,000. The lease require the BBB to pay$1,000 annual executory cost. The lease does not transfer ownershipnon contain a bargain purchase option. Interest 4%. Please use 75%and 90% to calculate qualification.

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