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    poofy85's Avatar
    poofy85 Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Aug 10, 2010, 04:12 PM
    Lease Payments
    I need to figure out an annual lease payment... in the question I have been given both the carrying value of $162,500, and the fair market value of $225,000. The rate is 10% and the lease term is 5 years. I am unsure of which amount to use to determine the lease payment... do I use the carrying value or the fair market value?
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
    		  
    #2

    Aug 11, 2010, 04:44 AM
    Use the FMV. A lease is really just another way of selling an asset, or at least selling a portion of an asset. And of course, whenever you sell an asset you'll sell it at its fair value, regardless of its carrying amount on the books.
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