Leased Asset Hopper Corporation signed a ten-year capital lease on January 1, 2010. The lease requires annual

Question:

Leased Asset Hopper signed a ten-year capital lease on January 1, 2010. The lease requires annual payments of $8,000 every December 31.

Required
1. Assuming an interest rate of 9%, calculate the present value of the minimum lease payments.
2. Explain why the value of the leased asset and the accompanying lease obligation are not reported on the initially at $80,000.

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