Question: CDI decided that there is more value in improving its sewing technology than in investing in a screen-printing machine. Therefore, CDI finalized a lease agreement

CDI decided that there is more value in improving its sewing technology than in investing in a screen-printing machine. Therefore, CDI finalized a lease agreement for a new cloth-cutting machine (Appendix III). It is now June 5, Year 1, and Jesus is preparing the initial journal entry for the new lease. CDI will exercise the option to purchase the machine at the end of the lease since the purchase price is below the expected fair value at that date. The lease liability has been correctly calculated at $334,642 (including the exercise of the purchase option), and CDI's borrowing rate is still 8%

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