F4

Question 1

When calculating lease payments the lessee includes:

Answer 1

1. Required contractual fixed payments
2. Exercise price of an options that’s reasonably assured
3. Purchase price @ end of the lease
4. Residual guarantees likely to be owed
5. Termination penalties reasonably assured

Question 2

How long should finance lease be amortized when it has a written purchase option or the lessee takes ownership of the asset at the end of the term?

Answer 2

The leased asset should be amortized over the ECONOMIC LIFE of the asset