On 1-1-2021, Landis Company (lessor) leased some equipment to the Nelson Company (lessee). It was a 10-year noncancelable lease requiring Nelson to pay Landis $100,000 every 12-31 during the lease period. The equipment has an estimated economic life of 10 years with no expected residual value (i.e., $0) at the end of that time (i.e., 12-31-2030).

Landis sets the lease payments so as to earn a 8% annual rate of return; Nelson is aware of this rate. This is a finance lease for Nelson Company (lessee).

Related to the lease what will be the book value of the total liability (i.e., current and noncurrent), i.e., lease payable, reported on the  12-31-2022 balance sheet of Nelson Company (lessee) ?

Answer rating: 100% (QA)

Calculating the Book Value of Lease Payable for Nelson Company Since this is a finance lease for Nel... View the full answer