Question
Homestead Corporation entered into a finance lease to lease equipment from Highlander, Inc. on January 1, 2020. The lease calls for annual lease payments of
Homestead Corporation entered into a finance lease to lease equipment from Highlander, Inc. on January 1, 2020. The lease calls for annual lease payments of $10,000, beginning on December 31, 2020 for each of the 5 years of the lease. In addition, Highlander, Inc. will pay Homestead Corporation $2,000 as a cash incentive for entering the lease by January 1, 2020. In relation to the lease agreement, Homestead incurred the following costs. Commissions for selling agents $900 Internal engineering costs 500 Legal fees resulting from the execution of the lease 3,000 If the value of the lease liability is $44,651, what amount will Homestead record as the value of the right-of-use asset on January 1, 2020, at commencement of the lease?
Value of the right-of-use asset
Homestead Corporation entered into a finance lease to lease equipment from Highlander, Inc. on January 1, 2020. The lease calls for annual lease payments of $10,000, beginning on December 31, 2020 for each of the 5 years of the lease. In addition, Highlander, Inc. will pay Homestead Corporation $2,000 as a cash incentive for entering the lease by January 1, 2020. In relation to the lease agreement, Homestead incurred the following costs. $900 Commissions for selling agents Internal engineering costs Legal fees resulting from the execution of the lease 500 3,000 If the value of the lease liability is $44,651, what amount will Homestead record as the value of the right-of-use asset on January 1, 2020, at commencement of the lease? Value of the right-of-use asset $Step by Step Solution
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