Bentley Inc. (the lessor) leases an asset to Haley Corp. (the lessee) for four years. Data relating to this lease are provided below. Assume this lease is a capital lease in all parts below. Answer the following questions for Haley Corp. (the Lessee). 1. Lease is signed on 1/1/1 2. Lease term: 4 years 3. Remaining useful life of leased asset as of 1/1/1: 6 years 4. Fair market value on 1/1/1: $60,000 5. Expected fair market value of leased asset on 12/31/4: $1,000 6. Estimated Net Salvage Value on 12/31/5: $6,000 7. Incremental borrowing rate: 10% 8. Actual fair market value of leased asset on 12/31/4: $8,000 9. Payments of $20,000 are to be made at the end of each year. Executory costs represent $2,000 of the $20,000 payment. 10. The lease contains a GRV (guaranteed residual value) on 12/31/4 of $4,000. a. Strong form capital lease under b.Strong form capital lease under c. Weak form capital lease under d. Weak form capital lease under #4 Operating lease
