Beaudoin Haulage has signed a five-year lease with GMAC on a new dump truck. Beaudoin intends to
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Beaudoin intends to capitalize the lease and report it as a long-term liability. Lease payments of $2700 are made at the beginning of each month. To purchase the truck, Beaudoin would have had to borrow funds at 9% compounded monthly.
a. What initial liability should Beaudoin report on its balance sheet?
b. How much will the liability be reduced during the first year of the lease?
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a The initial lease liability is the present value of all payments discounted at the cost of bor...View the full answer
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