Question
Martinez Corporation entered into an operating lease agreement to lease equipment from Badger, Inc. on January 1, 2020. The lease calls for annual lease payments
Martinez Corporation entered into an operating lease agreement to lease equipment from Badger, Inc. on January 1, 2020. The lease calls for annual lease payments of $38,000, beginning on January 1, for each of the 3 years of the lease. In addition, Badger will pay Martinez $5,000 as a cash incentive for entering the lease by January 1, 2020. In relation to the lease agreement, Martinez incurred the following costs.
Salaries of employees involved in the investigation of the lease | $3,500 | |
Lease document preparation costs incurred after execution of the lease | 500 |
Martinezs incremental borrowing rate is 6%. If the value of the lease liability is $107,669, what amount will Martinez record as the value of the right-of-use asset on January 1, 2020, at commencement of the operating lease?
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