CAPITAL LEASE DEPRECIATION

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pierovic18

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How should i depreciate in a capital lease? should i do it based on the economic life of the asset or based on the term of the lease?
That is very tricky in all the questions.
 
that is very confusing, i have seen problems wich can use either one. Also I dont know when to use annuity due? sometimes they use it, sometimes they dont use it.
 
generally you would depreciate over the useful life of the asset if at termination of the lease there is title transfer, otherwise you would depreciate the over the lease term.
 
use of annuity due depends on the occurence of the cashflow, if the lease payments are in advance or prepaid, then when calculating the MLP PV you should assume that it is an annuity due....
 
Yea the whole leases section confuses me.

Anyway, yea like Wingman said, you depreciate over useful life if thre is a bargain purchase option/and or title transfer in the capital lease. Because now in essence the cap leased asset has the same life as any other asset, so you depreciate normally.

Otherwise you depreciate over the lease term, since the life of the cap leased asset will be less than the useful life of the asset.
 
I bet they won't even have leases on the test. Rather, that's what I'm hoiping for because I am USELESS on the lease section. *chews fingernails*
 
"I bet they won't even have leases on the test. Rather, that's what I'm hoiping for because I am USELESS on the lease section. *chews fingernails*"

Oh they will..but just about 2 or 3.
 
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