On January 1, 2016, Watson Company signed a four-year lease requiring annual payments of $45,000, with the
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Question:
On January 1, 2016, Watson Company signed a four-year lease requiring annual payments of $45,000, with the first payment due on January 1, 2016. Watson's incremental borrowing rate was 7%. Actuarial information for 7% follows:
3 Periods 4 Periods 5 Periods
Present value of an annuity due of 1 @ 7% 2.80802 3.62432 4.38721
Present value of ordinary annuity of 1 @ 7% 2.62432 3.38721 4.10020
Assuming the lease qualifies as a capital lease, what amount should be recorded as leased equipment under capital leases on January 1, 2016 (rounded to the nearest dollar)?
a. $197,424
b. $163,094
c. $152,424
d. $184,509
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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