RSM221H1 Chapter Notes -Amortization Schedule, Income Statement, Capital Budgeting
Document Summary
This is a capital lease to xu since the lease term (8 years) is greater than 75% of the economic life (8 years) of the leased asset. The lease term is 100% (8 8) of the asset"s economic life. This also meets the requirements of ifrs, under which it is referred to as a financing lease. This criteria for treating the lease as a capital lease has also been met. Note that meeting just one of the criteria is sufficient for classification as a capital lease. There is no bargain purchase option in this case. The following is a schedule of future minimum lease payments under the capital lease expiring december 31, 2019 together with the balance of the obligation under capital lease. When negotiating a lease arrangement, the lessor sets the lease payments receivable to obtain the appropriate return for the asset leased.
