On January 1, 2009, Mega Company leased equipment under a 5-year lease with payments of $7,000 on each December 31 of the lease term. The present value of the lease payments at a discount rate of 9% is $27,230. The lease is considered a capital lease.
A. Determine the amount of the leased asset and lease obligation on January 1, 2009.
B. Why are some leases accounted for as purchases by the lessee?

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The Answer of On January 1, 2009, Mega Company leased equipment under a 5-year lease with payments of $7,000 on each December 31 of the lease term. The present value of the lease payments at a discount rate of 9% is $27,230. The lease is considered a capital lease.
A. Determine the amount of the leased asset and lease obligation on January 1, 2009.
B. Why are some leases accounted for as purchases by the lessee?

On January 1, 2009, Mega Company Leased Equipment Under a 5-Year