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Question 2 - Week 5 (7 marks) Fitbit Ltd has leased a machine on the following...

Question 2 - Week 5 Fitbit Ltd has leased a machine on the following terms: Date of entering lease 1 July 2019 Duration of lease 5 years Life of asset 6 years Unguaranteed residual value $40,000 Lease payments inception (at the start) $60,000 Annual payments (5) $65,000 Implied rate 11.0 %

Required: Determine the Fair Value (rounded off) of the leased asset.

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Answer #1

The Fair value of the leased asset will include the present value of all the lease payments and the present value of unguaranteed residual value.

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