JMR Company Leases an Asset from KAR Company

JMR Company leases an asset from KAR Company.The rate implicit in the lease is 12% and JMR's incremental borrowing rate is 11%.JMR is aware of the implicit rate.Assuming that both rates would provide an MLP amount well below the fair value of the leased asset, the rate that KAR should use for discounting the net lease payment is:

A) 11% under both ASPE and IFRS.
B) 12% under both ASPE and IFRS.
C) 12% under ASPE and 11% under IFRS.
D) 11% under ASPE and 12% under IFRS.

Correct Answer:

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