What is the cost basis of an asset acquired under a capital lease?
A)the sum of the gross minimum lease payments
B)the present value of the minimum lease payments plus executory costs
C)the present value of the minimum lease payments plus the present value of executory costs
D)the present value of the minimum lease payments excluding executory costs

Question

Quizplus · Accepted Answer

The cost basis of an asset acquired under a capital lease is the present value of the minimum lease payments plus executory costs. This is because, under a capital lease, the lessee is essentially financing the purchase of the leased asset through the lease payments. Therefore, the cost basis should reflect the fair value of the leased asset, which is the present value of the lease payments plus any additional costs that are directly related to the lease.

What Is the Cost Basis of an Asset Acquired Under