Brunswick Trucking has signed a five-year lease with Ford Credit Canada Ltd. on a new truck. Lease payments of $1900 are made at the beginning of each month. To purchase the truck, Brunswick Trucking would have had to borrow funds at 8.25% compounded monthly.
a) What initial liability should Brunswick 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 Brunswick Trucking has signed a five-year lease with Ford Credit Canada Ltd. on a new truck. Lease payments of $1900 are made at the beginning of each month. To purchase the truck, Brunswick Trucking would have had to borrow funds at 8.25% compounded monthly.
a) What initial liability should Brunswick report on its balance sheet?
b) How much will the liability be reduced during the first year of the lease?

Brunswick Trucking Has Signed a Five-Year Lease with Ford Credit