Ask Question
30 January, 04:19

The amount to be recorded as the cost of an asset under a finance lease is equal to the present value of the lease payments or the fair value of the asset, whichever is lower. carrying value of the asset on the lessor's books. present value of the lease payments plus the present value of any unguaranteed residual value. present value of the lease payments.

+5
Answers (1)
  1. 30 January, 04:45
    0
    whichever is lower

    Explanation:

    Any assets cost is recorded at present value or fair value, whichever is lesser. This is analogous to stock being valued at cost price or sale price, whichever is less.

    The reason behind is Prudence or Conservatism principle of accounting. The principle states that anticipated losses should be accounted for, but the anticipated gains should not be accounted for.

    So, the asset value is recorded at the least value of the alternative valuations.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The amount to be recorded as the cost of an asset under a finance lease is equal to the present value of the lease payments or the fair ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers