Beaudoin Haulage has signed a five-year lease with GMAC on a new dump truck. Beaudoin intends to capitalize the lease and report it as a long-term liability. Lease payments of $2700 are made at the beginning of each month. To purchase the truck, Beaudoin would have had to borrow funds at 9% compounded monthly.
a) What initial liability should Beaudoin report on its balance sheet?
b) How much will the liability be reduced during the first year of the lease?

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The Answer of Beaudoin Haulage has signed a five-year lease with GMAC on a new dump truck. Beaudoin intends to capitalize the lease and report it as a long-term liability. Lease payments of $2700 are made at the beginning of each month. To purchase the truck, Beaudoin would have had to borrow funds at 9% compounded monthly.
a) What initial liability should Beaudoin report on its balance sheet?
b) How much will the liability be reduced during the first year of the lease?

Beaudoin Haulage Has Signed a Five-Year Lease with GMAC on a New