Question
Fox Corp. entered into a nine-year capital lease on a warehouse on December 31, 20x2. Lease payments of $52,000, which includes real estate taxes of
Fox Corp. entered into a nine-year capital lease on a warehouse on December 31, 20x2. Lease payments of $52,000, which includes real estate taxes of $2,000, are due annually, beginning on December 31, 20x3, and every December 31 thereafter. Fox does not know the interest rate implicit in the lease; Fox's incremental borrowing rate is 9%. The rounded present value of an ordinary annuity for nine years at 9% is 5.6. The rounded present value of an annuity due for nine years at 9% is 6.5. What amount should Fox report as capitalized lease liability at December 31, 20x2?
| a. | $338,000 | |
| b. | $351,000 | |
| c. | $302,400 | |
| d. | $280,000 |
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Not For Profit Audit Committee Best Practices
Authors: Warren Ruppel
1st Edition
0471697419, 978-0471697411
