Question
On September 30, 2018, Chamizal Corp. leased a warehouse. Terms of the lease require Chamizal to make 20 annual lease payments of $75,000 with the
On September 30, 2018, Chamizal Corp. leased a warehouse. Terms of the lease require Chamizal to make 20 annual lease payments of $75,000 with the first payment due immediately. Accounting standards require the company to record a lease liability when recording this type of lease. Assume a 5% interest rate. What amount should Chamizal record the lease liability for on September 30, 2018, before the first payment is made? Time value of money tables can be found at the back of the exam. (Allow for minor rounding errors when using the tables.)
A. $876,422
B. $981,399
C. $935,224
D. $998,872
E. $1,000,000
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