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9. Wal-Mart Co. (a lessee) lcased a frozen food cooler under a 4 year lease agreement. The lease begins on January 1, YROI, with rental
9. Wal-Mart Co. (a lessee) lcased a frozen food cooler under a 4 year lease agreement. The lease begins on January 1, YROI, with rental payments due at the start of each rental period. The lease is properly classified as an operating lease and includes annual increases in the rental payment to compensate the Lessor for inflation. The cooler's service potential is expected to remain constant over the lense period. Required rental payments specified in the lease contract are as follows: Year Date Payment is Due Amount of Rental Payment YROI January 1, YROI S10 YR02 January 1, YR02 $ 20 YRO3 January 1, YRO3 $ 30 YR04 January 1, YR04 540 Total Rental Payments S100 At lease inception, Wal-Mart correctly computed the Lease Liability as 883 using a discount rate of 10%. Wal-Mart's yearend is December 314 Assuming that all payments are made when due, the company's December 31, YROI financial statements will include the following balances (rounded to the nearest dollar) a b c d c. Lease Expense SIO SIO $25 $23 None of the above Lease Liability $73 S80 $73 SNO
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