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What is the amount of principal reduction recorded when the second lease payment is made in Year 2? Crane, Inc. leased equipment from Tower Company
What is the amount of principal reduction recorded when the second lease payment is made in Year 2?
Crane, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $334152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4 year useful life and no salvage value. Crane, Inc.'s incremental borrowing rate is 9% and the rate implicit in the lease (which is known by Crane, Inc.) is 7%. Assuming that this lease is properly classified as a capital lease, what is the amount of principal reduction recorded when the second lease payment is made in Year 2Step by Step Solution
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