Medical Imaging Co. leased equipment to Family Care. Inc. for 10 years beginning on January 1. Year 1. The rst lease payment of $12,000 was made on January 1. Year1, with all subsequent lease payments due annually on December 31st. The equipment has an estimated useful life of 12 years and its fair value is equal to the present yalue of the minimum lease payments. The interest rate implicit in the lease is 10% and is known to Family Care, Inc. Family Care, Inc.'s incremental borrowing rate is 11%. Family Care uses U.S. GAAF. At the end of the lease term. Family Care, Inc. does not have the option to purchase the equipment and ownership will not transfer.

present value amounts

PV of annuity due of $1 for 10 periods at 10% 6.759

PV of annuity due of $1 for 10 periods of 11% 6.537

will the lease be accounted for as an operation lease o a capital lease by the lessee?

what is the PV of the minimum lease payments

using the amortization table below calculate the interest expense accrued during year one

table

date periodic payment interest lease obligation amortization of lease liability carrying amount of lease

12/1/year 1 $12000

12/31/year 1 $12000