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What amount should ashe capitalize for this leased property

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Question - On January 2, 20x6, Ashe Company entered into a ten-year noncancellable lease requiring year-end payments of 100,000. Ashe's incremental borrowing rate is 12% while the lessor's implicit interest rat, known to Ashe, is 10%. Ownership of the property remains with the lessor at expiration of the lease. There is no bargain purchase option. The leased property has estimated economic life of 12 years. What amount should Ashe capitalize for this leased property on January 2, 20x6? Show the solution and explain.

Reference no: EM132806412

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