Stockton, Inc. leased machinery with a fair value of $250,000 from Lanai Machine Company on December 31,

Question:

Stockton, Inc. leased machinery with a fair value of $250,000 from Lanai Machine Company on December 31, 2008. The contract is a six-year non cancelable lease with an implicit interest rate of 10 percent. The lease requires annual payments of $50,000 beginning December 31, 2008. Stockton appropriately accounted for the lease as a capital lease. Stockton's incremental borrowing rate is 12 percent. Assuming the present value of an due of 1 for 6 years at 10 percent is 4.7908 and the present value of an due of 1 for 6 years at 12 percent is 4.6048, what is the lease liability that Stockton should report on the at December 31, 2008?
a. $189,540
b. $200,000
c. $230,240
d. $239,540

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...