Lease capitalization's value determination requires one of the following methods.
A)Finding the net present value of future lease payments
B)Recording the asset's purchase price as the lessee's asset
C)The lessor shows the asset's effect on his leverage
D)Altering the lessee's restrictive covenants by the amount of the asset's value

Question

Quizplus · Accepted Answer

The most common method for determining the value of a lease capitalization is finding the net present value of future lease payments. This takes into account the time value of money and allows for more accurate valuation of the leased asset.

Lease Capitalization's Value Determination Requires One of the Following Methods