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Single choiceIntermediatePublished

Question · Initial measurement of the lease liability

Fontbelle leases a machine tool. The lessor does not provide the information needed to compute the interest rate implicit in the lease, which Fontbelle cannot readily determine. Its incremental borrowing rate is 5%, its weighted average cost of capital 9% and its term deposits earn 2%. Which rate should be used to discount the lease payments at the commencement date?

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