Question
On December 31, 2021, Carla Vista Co. leased a machine from Catt, Inc. for a 5-year period. Equal annual payments under the lease are $1850000
On December 31, 2021, Carla Vista Co. leased a machine from Catt, Inc. for a 5-year period. Equal annual payments under the lease are $1850000 (including $95000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2021, and the second payment was made on December 31, 2022. The five lease payments are discounted at 10% over the lease term. The present value of minimum lease payments at the inception of the lease and before the first annual payment was $7714260. The lease is appropriately accounted for as a finance lease by Carla Vista. In its December 31, 2022 balance sheet, Carla Vista should report a lease liability of
$5769260.
$4600686.
$5277834.
$5864260.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started