Huebner Corporation leases new equipment on December 31, 2014. The lease transfers ownership of the equipment to Huebner at the end of the lease. The present value of the lease payments is $192,000. After recording this lease, Huebner has assets of $1,800,000, liabilities of $1,100,000, and stockholders’ equity of $700,000.
(a) Prepare the entry to record the lease,
(b) Compute and discuss the debt to assets ratio at year-end.