A lease agreement calls for annual lease payments of $26,269 over a six-year lease term, with the

Question:

A lease agreement calls for annual lease payments of $26,269 over a six-year lease term, with the first payment at January 1, the lease’s commencement, and subsequent payments at January 1 of the following five years. The interest rate is 5%. If the lessee’s fiscal year is the calendar year, what would be the amount of the lease liability that the lessee would report in its balance sheet at the end of the first year? What would be the interest payable?

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...