Thus, the lessee has a choice to give the car dealership either the keys to the car or a cheque in the amount of the residual value, thereby purchasing the car. The amount recorded is the present valu...Thus, the lessee has a choice to give the car dealership either the keys to the car or a cheque in the amount of the residual value, thereby purchasing the car. The amount recorded is the present value of the remaining lease payments, and it is calculated using a discount rate equivalent to the interest rate the business would have had to pay if the business had purchased the asset instead.
Thus, the lessee has a choice to give the car dealership either the keys to the car or a cheque in the amount of the residual value, thereby purchasing the car. The amount recorded is the present valu...Thus, the lessee has a choice to give the car dealership either the keys to the car or a cheque in the amount of the residual value, thereby purchasing the car. The amount recorded is the present value of the remaining lease payments, and it is calculated using a discount rate equivalent to the interest rate the business would have had to pay if the business had purchased the asset instead.
