Question: Plymouthville leased equipment with a fair market value of
Plymouthville leased equipment with a fair market value of $ 905,863. The life of the noncancellable lease is 10 years, and the economic life of the property is 10 years. Using an 8 percent interest rate, the present value of the minimum lease payments is $ 905,863. The first payment of $ 125,000 is due January 1 of the current year. Each additional payment is due on the first of January in the next 9 years. What is the amount of the asset to be recorded in Plymouthville’s Capital Projects Fund? If no asset will be recorded, explain why.
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