Kingbird Company leases a building and land. The lease term is 7 years and the annual fixed payments are $720,000. The lease arrangement gives Kingbird the right to purchase the building and land for...
Kingbird Company leases a building and land. The lease term is 7 years and the annual fixed payments are $720,000. The lease arrangement gives Kingbird the right to purchase the building and land for $13,000,000 at the end of the lease. Based on an economic analysis of the lease at the commencement date, Kingbird is reasonably certain that the fair value of the leased assets at the end of lease term will be much higher than $13,000,000.
What are the total lease payments in this lease
arrangement?
| Total lease payments :____________ |
Homework Answers
Answer:-
| Total Lease Payment = Annual Lease Payment * Number of Years + Value of Rights Asset | |
| Total Lease Payment | 720000*7+13,000,000 |
| $ 18,040,000 | |
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