which of the following statements about leasing is false: a) the interest rate implicit is a lease is the discount rate that the lessor used to detrmine the lease payments b)when a sale leaseback rrepresents substantially the entire aset any profit from the sale must be deferred and amortised over the life of the lease c) capital lease is considered to be a direct financing lease, in this case gross profits must be recognised at the inception of the lease. d) firms that capitalise their leases will have lower current ratios and higher debt to equity ratios than firms that treat the leases as operating. please give ur explanation… ta
c is the answer!!!
c, prfit recognition is with sales type lease
when PVMLP IS = Fair Value it is considered direct financing and no gross profit is recognised only interest expense.