The lessee should use the lessor's borrowing rate (if known)to account for a finance lease, even if this provides a present value of lease payments that is higher than the fair value of the asset at the inception of the lease.

Question

Quizplus · Accepted Answer

The lessee should use the implicit rate in the lease if it is readily determinable; otherwise, the lessee's incremental borrowing rate is used, not the lessor's borrowing rate.

The Lessee Should Use the Lessor's Borrowing Rate (If Known)to