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You have the following lease schedule
Lease schedule
8% interest rate
Payment PV Factor PV
Year 1: $ 57,455 0.926 $53,199
Year 2: $ 59,000 0.857 $50,583
Year 3: $ 62,000 0.794 $49,218
$ 178,455 $153,000
1. If this schedule represented a financial lease what would be the expenses recorded in Year 2 ?
2. If this schedule represented an operating lease what would be the expense recorded in year 3?
3. If this schedule represented an operating lease what would be the end of year one lease liability balance?
Answer & Explanation
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