Johnson Ltd enters into a lease agreement with Peterson Ltd under the following conditions:
The lease may be cancelled only with the permission of the lessor. If the rate of interest implicit in the lease is 10 per cent, what is the fair value of the asset at the inception of the lease, and is the lease a finance or operating lease?
A) $56,745, finance lease.
B) $52,596, operating lease.
C) $56,745, operating lease.
D) $52,596, finance lease.
E) None of the given answers.
Correct Answer:
Verified
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