Which discount rate is required to be used by lessors?
The exercise rate specified in the lease
The market rate estimated at the end of the lease term
The interest rate implicit in the lease
The incremental borrowing rate
Lessors are required to use the interest rate implicit in the lease, if it can be ascertained. If the interest rate implicit in the lease cannot be determined, the lessor may use the incremental borrowing rate. Therefore, the correct answer is: The interest rate implicit in the lease
