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Question 15 (1 point) On January 1, 2020, Local Builders Inc. (LBI) leased a new excavator from Bear Corp. The fair market value of the
Question 15 (1 point) On January 1, 2020, Local Builders Inc. (LBI) leased a new excavator from Bear Corp. The fair market value of the excavator on January 1, 2020, is $490,000. Relevant details regarding the lease agreement are as follows: The lease agreement is for 12 years. Annual payments of $55,000 are due at the beginning of each year, starting January 1, 2020. Included in the annual payments are maintenance fees of $5,000. The implicit rate is 6% and the IBR is 6.5%. The equipment has an estimated useful life of 14 years. Both LBI and Bear Corp. report under ASPE. . LBI has determined that this is a capital lease. What is the balance of the lease liability for LBI at the end of December 31, 2020? Oa) $394,344 b) $418,005 c) $409,442 d) $459,805
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