Leased Assets

Koffman and Sons signed a four-year lease for a forklift on January 1, 2017. Annual lease payments of $1,670, based on an interest rate of 8%, are to be made every December 31, beginning with December 31, 2017.

How does this entry affect the accounting equation?

If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Round answers to the nearest whole dollar.

Explain why the value of the leased asset is not recorded at $6,680 ($1,670 x 4). The leased asset should be reported at thepresent valueof the payments which is $?not at $?