Question
On January 1, 20x1, ABC, Co. leased machinery with a fair value of $750,000 from XYZ Rentals Co. The agreement is a seven-year non-cancelable lease
- On January 1, 20x1, ABC, Co. leased machinery with a fair value of $750,000 from XYZ Rentals Co. The
agreement is a seven-year non-cancelable lease requiring annual payments of $140,000 . The lease is appropriately accounted for by ABC as a finance lease. ABCs incremental borrowing rate is 11%. ABC knows the interest rate implicit in the lease payments is 10%. The first payment is due 1/1/x1.
The present value of an annuity due of 1 for 7 years at 10% is 5.35526.
The present value of an annuity due of 1 for 7 years at 11% is 5.23054
In its December 31, 20x1 balance sheet, ABC should report a lease liability of:
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Computer Aided Fraud Prevention And Detection A Step By Step Guide
Authors: David Coderre
1st Edition
0470392436, 978-0470392430
