On January 1, 2016, Watson Company signed a four-year lease requiring annual payments of $45,000, with the first payment due on January 1, 2016. Watson's incremental borrowing rate was 7%. Actuarial information for 7% follows:
Assuming the lease qualifies as a capital lease, what amount should be recorded as leased equipment under capital leases on January 1, 2016 rounded to the nearest dollar)?

Question

On January 1, 2016, Watson Company signed a four-year lease requiring annual payments of $45,000, with the first payment due on January 1, 2016. Watson's incremental borrowing rate was 7%. Actuarial information for 7% follows:  
Assuming the lease qualifies as a capital lease, what amount should be recorded as leased equipment under capital leases on January 1, 2016 rounded to the nearest dollar)?

Quizplus · Accepted Answer

The Answer of On January 1, 2016, Watson Company signed a four-year lease requiring annual payments of $45,000, with the first payment due on January 1, 2016. Watson's incremental borrowing rate was 7%. Actuarial information for 7% follows:  
Assuming the lease qualifies as a capital lease, what amount should be recorded as leased equipment under capital leases on January 1, 2016 rounded to the nearest dollar)?

On January 1, 2016, Watson Company Signed a Four-Year Lease