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Leases The company leases its main offices for $3,500 per month. On its face, the lease expires December 31, 2017, but there is an option

Leases

The company leases its main offices for $3,500 per month. On its face, the lease expires December 31, 2017, but there is an option to extend for an additional 5 years at $4,500 per month. The space was built out by the lessor, to suit the lessee, prior to occupancy, and there have been no significant improvements to the space since. The company also rents its electronic parts storage warehouse for $1,000 per month. That lease, which expires 12.31.201, has an automatic rent escalation of 10% per year for every year in which the consumer price index increases. All rent payments for 2014 have been made and the payments have been appropriately recorded. Note: this is space rented for the company to occupy, not space they rent out to others.

On July, 1, 2014, leased a new stamping press. The fair value of the equipment is $948,142. The lease calls for 120 monthly Payment of $8,000. XYZ, Inc.s marginal borrowing rate is higher than the 6% rate implicit in the lease. The estimated useful life of the equipment is eight years. The lease does not transfer title to lessee and does not contain any bargain purchase language.

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