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Which treatment would be the correct accounting treatment

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Reference no: EM132497318

ABC is a lessor who wishes to lease a piece of equipment. The lease term in 5 years. The value of the lease is AED 150,000. The equipment has a residual value of AED 20,000 at the end of 5 years which is not guaranteed by the lessee.

Question 1: Which of the following treatment would be the correct accounting treatment while calculating the lease value in the books of lessor?

a. Ignore the present value of residual value for calculation of lease using PV factor.

b. Add the residual value for calculation of lease.

c. Add the present value of residual value for calculation of lease using PV factor.

d. Ignore the residual value for calculation of leas

Reference no: EM132497318

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