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Question
Present value interest factors are:Assuming that the lease is a capital lease for Ray, which one of the following interest rates will Ray use to record this lease?
A. Use 8.5% because it is the lessor's incremental borrowing rate.
B. Use 9.0% because it is the lessee's incremental borrowing rate.
C. Use 10.0% because it is the implicit lease rate of return to the lessor.
D. Use 8.5% because it is the lesser of the implicit rate and Ray's incremental borrowing rate.
Answer
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