Homestead Corporation entered into an operating lease to lease equipment from Highlander, Inc. on January 1, 2025.

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Homestead Corporation entered into an operating lease to lease equipment from Highlander, Inc. on January 1, 2025. The lease calls for annual lease payments of $10,000, beginning on December 31, for each of the 5 years of the lease. In addition, Highlander, Inc. will pay Homestead Corporation $2,000 as a cash incentive for entering the lease by December 31. In relation to the lease agreement, Homestead incurred the following costs.image


Homestead’s incremental borrowing rate is 6%. If the value of the lease liability is $44,651, what amount will Homestead record as the value of the right-of-use asset on January 1, 2025, at commencement of the operating lease?

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Intermediate Accounting

ISBN: 9781119790976

18th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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