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Which would be higher suppose togo is considering

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At the beginning of 20x1, Togo, Inc. entered into a finance lease to acquire equipment. The lease requires four annual payments of $25,663 beginning on December 31, 20x1. The present value of the lease payments, discounted at 8%, is $85,000. The leased asset is expected to be worthless at the end of the lease and Togo uses the straight-line depreciation method.

Problem 1: Suppose Togo is considering whether to treat this as an operating lease instead. For the year ended 20x2, which would be higher?

A) The expense related to the finance lease

B) The expense related to the operating lease

C) Neither. The expenses on the two would be identical

Reference no: EM132656257

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