A lessee normally computes the liability on a lease as the ________.
A) present value of minimum lease payments
B) fair market value of the leased asset
C) future value of the minimum lease payments
D) sum of the cash payments over the term of the lease

Question

Quizplus · Accepted Answer

The liability on a lease is typically calculated as the present value of the minimum lease payments, which reflects the current worth of the payments to be made over the lease term, discounted at the interest rate implicit in the lease or the lessee's incremental borrowing rate.

A Lessee Normally Computes the Liability on a Lease as the ________