On December 31, 2020, Eastern Inc. leased machinery with a fair value of $420,000 from Northern...

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On December 31, 2020, Eastern Inc. leased machinery with a fair value of $420,000 from Northern Rentals. The agreement is a six- year non-cancellable lease requiring annual payments of $80,000 beginning December 31, 2020. The lease is appropriately accounted for by Eastern as a finance lease. Eastern's incremental borrowing rate is 11%; however, they also know that the interest rate implicit in the lease payments is 10%. Eastern adheres to IFRS. The present value of an annuity due for 6 years at 10% is 4.7908. The present value of an annuity due for 6 years at 11% is 4.6959. On its December 31, 2020 statement of financial position, Eastern should report a lease liability of (rounded to the nearest dollar) $375,672. $383,264. $303,264. $340,000. On December 31, 2020, Eastern Inc. leased machinery with a fair value of $420,000 from Northern Rentals. The agreement is a six- year non-cancellable lease requiring annual payments of $80,000 beginning December 31, 2020. The lease is appropriately accounted for by Eastern as a finance lease. Eastern's incremental borrowing rate is 11%; however, they also know that the interest rate implicit in the lease payments is 10%. Eastern adheres to IFRS. The present value of an annuity due for 6 years at 10% is 4.7908. The present value of an annuity due for 6 years at 11% is 4.6959. On its December 31, 2020 statement of financial position, Eastern should report a lease liability of (rounded to the nearest dollar) $375,672. $383,264. $303,264. $340,000.

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303264 is correct Taking the implicit rat... View the full answer