In Computing the Present Value of the Minimum Lease Payments

question 22

Multiple Choice

In computing the present value of the minimum lease payments under ASC 842, the lessee should

• A) Use its incremental borrowing rate in all cases
• B) Use either its incremental borrowing rate or the implicit rate of the lessor, whichever is higher, assuming that the implicit rate is known to the lessee
• C) Use either its incremental borrowing rate or the implicit rate of the lessor, whichever is lower, assuming that the implicit rate is known to the lessee
• D) Use the implicit rate in all cases.

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