Question: On January 1, 2016, Stephen Corp., a lessor, signed a direct financing lease. Stephen was to receive annual year-end payments of $10,000 for ten years,

On January 1, 2016, Stephen Corp., a lessor, signed a direct financing lease. Stephen was to receive annual year-end payments of $10,000 for ten years, after which there was a guaranteed residual value of $8,000. The implicit interest rate was 8%. Actuarial information for 8%, ten periods follows: (round to the nearest whole dollar)

Present value of ordinary annuity of $1 6.71008

Present value of amount of $1 0.46319

On January 1, 2016, what amount should Stephen record as a debit to Lease Receivable?

a. $67,100 b. $70,814 c. $100,000 d. $108,000

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