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Question
1. Five payments of $26,379.74 (a 9% implicit rate) due at the end each year.2. The fair value of the tractor is $100,000.
3. The lease is nonrenewable and the tractor reverts to Star at the end of the lease term.
4. The tractor has a six-year economic life.
5. Hatfield has an excellent credit rating.
6. Star offers no warranty on the tractor other than the manufacturer's two-year warranty that is handled directly with the manufacturer.
In August 2010, the FASB and the IASB issued a jointly developed leasing exposure draft which
A. Takes a property rights approach and would require lessees to record a "right-of-use" asset and the associated liability.
B. Takes a performance obligation approach for lessees and removes the asset from the balance sheet rather than establishing a lease liability.
C. Takes a derecognition approach for lessees and establishes a lease asset and a lease liability for the present value of the expected rental payments.
D. All of the choices are correct.
Answer
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